For large investors, Coinbase is the gateway to the crypto market. The customer base of the Bitcoin exchange not only includes MicroStrategy. Tesla is also said to have made use of the exchange’s OTC desk. The Coinbase IPO is taking shape.
Large Bitcoin orders from institutional investors want to find a supplier. The largest US crypto exchange Coinbase has positioned itself as such. In addition to MicroStrategy, which stands for the establishment of the Bitcoin standard like no other company, Tesla is also said to have made use of the exchange’s OTC desk. The crypto medium The Block claims to have found out from internal circles.
Due to the massive allocation of Bitcoin by institutional investors, over-the-counter trading (OTC) is playing an increasingly important role in the crypto market. OTC transactions are over-the-counter direct sales that are coordinated between major suppliers and buyers. Mining farms in particular, but also hedge funds and payment service providers, use OTC platforms to bring their stocks to buyers.
The trading partners agree on fixed terms beforehand — a crucial criterion for investors in the highly volatile crypto market. Since OTC transactions are not processed via stock exchanges and are therefore not registered in the order books, they also have no direct influence on the price development. The assumption that asset managers like Grayscale or companies like MicroStrategy influence the course through large acquisitions — at least in a direct way — is therefore wrong. OTC business does have an indirect effect on the performance of cryptocurrencies, ultimately contributing to the supply shortage. In addition, corresponding press releases from investors à la MicroStrategy have a great signal effect on small investors.
The shadow of OTC transactions therefore extends far. Payment service provider Circle has estimated the trading volume processed via direct over-the-counter trading to be two to three times that of stock exchange trading .
While there are no official numbers due to the private nature of the OTC market, historical data suggests that the crypto OTC market regularly sees 2x to 3x the amount of trading volume that crypto exchanges process on a daily basis.
For US customers, Coinbase plays a central role. In a blog post , the exchange announced that MicroStrategy had processed its $ 425 million BTC purchase through the OTC desk attached to Coinbase Custody, an institutional crypto custody service. A large order was broken down into many small parts, which were executed via several trading venues.
This type of intelligent order routing minimizes the impact of the trade on the market and helps to disguise the overall size of the trade. Using our technology, the trading team was able to achieve an average execution price that was lower than the price at which the purchase began.
This saved MicroStrategy around $ 4.25 million. For this reason alone, the demand for OTC transactions for large investors can be explained.
Tesla is also said to have stocked up on Bitcoin worth 1.5 billion US dollars via Coinbase. The Block reports , citing internal sources. Ki Young Ju, CEO of the on-chain data platform Cryptoquant, had already made the assumption. Ki had linked the Tesla purchase to outflows from the Coinbase Pro wallets.
Meanwhile, Coinbase plans to go public. The crypto exchange submitted an IPO application to the SEC back in December. Although an official date is not yet known, everything points to an IPO with a bang.
Coindesk reports that the company’s valuation based on trading in the company’s privately held shares on the Nasdaq Private Market has risen to $ 77 billion. The unit price per share was therefore last on the secondary market at 303 US dollars with an estimated issue volume of 254 million. This was confirmed by traders to Coindesk, who had insight into the anonymous order book before the public listing.
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