Increased OTC Trading Activity in Crypto

Top crypto trading firms report a significant rise in over-the-counter (OTC) trading volumes recently, largely driven by the election outcome.

> "Long story short, OTC is going gangbusters right now," said Tim Ogilvie, head of institutional at Kraken. He noted that prices are up, but volumes are surging even more.

Kraken’s OTC trading volumes soared by 220% year-over-year, reflecting a trend across similar firms. Jake Ostrovskis, an OTC trader at Wintermute, observed that the market had been quiet earlier in the year until prices rallied around the election, prompting market participants to position themselves for the outcome.

Embert Lin from GSR acknowledged a notable increase in trading volumes since the election, as projects and investors became more active in managing their treasuries and seeking exposure beyond Bitcoin (BTC) and Ethereum (ETH).

A trader from an OTC firm mentioned that current trading volumes are comparable to the peak interest seen in 2021. BitGo, a crypto custodian, launched an OTC trading desk in the first half of 2024, significantly driven by ETF approvals and election fallout.

> "America is the largest market in the world, and being potentially more favorable towards this is significant," observed Brett Reeves from BitGo.

Increasing Risk Appetite

OTC desks report that clients are showing a willingness to explore riskier assets, moving beyond just Bitcoin and Ethereum.

Ogilvie commented, "There's probably a generalized feeling on the desk that there is an appetite for taking on more risk" as clients venture into more cryptocurrencies like Solana and other altcoins.
Ostrovskis added that liquidity is the key driver for institutions seeking to trade more substantial volumes.

Expectations for Crypto OTC Trading in 2025

Looking to 2025, BitGo's Reeves predicts sustained demand for OTC transactions, particularly for Bitcoin and Ethereum. He stated that OTC trading has helped lessen volatility in exchange markets and solidified crypto's position due to asset class maturation.

> "We might see another ETF — whether that’s Solana, XRP, or another coin," Reeves added.

Ostrovskis highlighted the increasing maturity of the derivatives market, as deeper involvement in options trading creates more demand for hedging. He noted the relevance of options on Bitcoin ETFs, which provide cost-effective collateralized product opportunities.

> "That opens a whole pool of capital there," he concluded.