One of the largest institutional cryptocurrency exchanges globally, LMAX Digital, saw a record daily volume of $6.6 billion on May 19 when the price of Bitcoin tumbled 30%, quickly followed by other cryptocurrencies.
Bitcoin reached its new all-time high in mid-April, with a 450% increase in six months. The most significant difference between this bull run and the one in 2017 is the participation of institutional investors.
As an authority on institutional investment in cryptocurrency assets, LMAX Digital is uniquely positioned to provide insight on big players’ involvement into the crypto market. When asked if institutional investors used the price volatility as an opportunity to buy or sell their Bitcoin, LMAX Group CEO David Mercer said that the recent drop in Bitcoin’s price was used by most to acquire more of the digital asset.
“For everyone who has a long-term view, it was an opportunity to buy. Now, did they buy at $28,000; did they buy at $35,000; did they buy at $40,000? Who knows?” said Mercer.
Regardless of the record-breaking $6.6 billion daily volume on the so-called “Black Wednesday” for Bitcoin, Mercer points out that the number of coins traded represents a better indicator of the direction in which the market is headed than the dollar value. With the average price of $35,000 on that day, 170,000 BTC changed hands.
Mercer said that globally, plenty of retail investors are trading on leverage with automated stop orders that can lead the market into what he called a “death spiral scenario.”
“Institutions are largely not involved in that market, staying out. And then they see an opportunity to add to their portfolio. As a corporate entity, we added to our portfolio. I hold some Bitcoin on my balance sheet. I aim for about 5% of my corporate assets to be in crypto. The price drops, so I need to rebalance it. I think every sensible institution who sees it as part of their portfolio will have added [Bitcoin] on Wednesday,” added Mercer.
The institutional exchange launched in 2018. It celebrated its third anniversary on May 24. According to LMAX Digital’s press release, the exchange has traded more than $400 billion in cryptocurrencies since its launch.
Institutional investors’ rising interest in cryptocurrencies may signal an exciting time ahead for retail investors as well. If you are contemplating a long-term investment, our team recommends you research the best cryptocurrency wallets to keep your assets safe.