XTRD.IO and Institutions: A Match Made in Heaven
BullOfBittrex
Introduction
For those who have followed the cryptocurrency markets, 2017 was a year of unprecedented growth. Bitcoin saw gains in excess of 1300%, while Ethereum returned an even more impressive 8665%, and countless others provided 10,000%+ returns. For the first time, retail investors entered an asset class before the big institutions did. In December 2017, both the CME and the CBOE launched Bitcoin future markets, and the NASDAQ plans to go forward with their own in April of this year. It’s no secret the institutions are paying attention to the crypto markets, but the problem is they don’t have a viable entrance with current exchanges. For the average Joe, the buying process is fairly simple. He logs in, finds the currency he wants to buy, puts a buy order in, and the process is complete. For an institution, that process isn’t as seamless due to the magnitude of their capital. Imagine for a moment if Goldman Sachs wanted to buy $1M worth of NEO. If they were to follow the same procedures, they would hop on Bittrex, put in their limit order worth $1M, and send the price flying. Their other option would be to market buy $1M, and yet again the price would increase by a significant margin. The current lack of liquidity in crypto markets makes it next to impossible for institutions to participate.
Institutional Interest
So why do the institutions even care about cryptocurrencies? To understand this, one must examine the current state of economics on a macroscopic scale. The U.S. stock market has recently gone through a period of being the most overbought since the months leading up to the Great Depression in 1929. For almost a decade, year after year, stocks have reached new highs. All markets go through cycles of bullish times and bearish times. Generally, the average bullish period in the stock market lasts for 5–7 years, and is then followed by a bearish period of 1–3 years. Many critics refer to cryptocurrencies as a bubble, yet they neglect to mention the stock market. On top of the overextended bullish trend of the stock market, interest rates are increasing, and the dollar is devaluing. Many analysts are predicting a stock market crash. So what is it about cryptocurrencies that becomes so appealing to institutions? There is currently a narrative being spoken on Wall Street. That narrative is calling cryptocurrencies a “non-correlative asset.” In the simplest terms, this means that the cryptocurrency market is unaffected by events in the stock market. This is a dream come true for institutions because it can serve as a hedge against the volatility of their other investments. Institutions make money by holding Joe’s money for an extended period of time. When Joe sees volatility, he takes his funds out of his brokerage account. Cryptocurrencies become the hedge that institutions desperately need against volatility. Yet they don’t get exposure due to a lack of liquidity.
Enter XTRD
Here comes the game changer for institutions: XTRD. XTRD is essentially becoming the missing link, or the onramp for large sums of institutional money to flood into the cryptocurrency market. XTRD will use tested and proven FIX API technology built into their platform to allow institutions to leverage multiple exchanges, with a much higher liquidity pool. FIX is the language of traditional financial markets. Developers for these institutions will be able to create customer order functions that current exchanges do not offer. On top of that, lower latency will allow orders to execute at a much faster rate which gives an opportunity for arbitrage, a better overall position, and a better cost basis for each currency. Strategic partnerships are in place, and more are being worked on every day. XTRD is essentially positioning itself to become a crypto-broker for institutions that operate across multiple exchanges. In the stock market, there are 100’s of different brokers that provide liquidity and find a stock at the lowest price. XTRD’s platform will be this link for the cryptocurrency market.
Potential for Growth and Utilization
The bottom line here comes down to the vast growth potential XTRD possesses. In 2016, global assets under management were roughly $85 trillion. Current projections estimate that the number will be $146 trillion by 2025. With the narrative on Wall Street, let’s assume that 1% of that figure comes into the cryptocurrency market. That would be $850 billion. Let’s be conservative and say that XTRD processes even 1% of that. The total would be $8.5 billion. For an institution to be capable of utilizing the platform, they must buy and use the XTRD Utility Token. With XTRD being the first platform of its kind, Institutional utility and the potential for growth here is astronomically high.
