May 8, 2019 12:00 UTC
May 8, 2019 at 19:31 UTC
A Comprehensive View on Trading Big Volumes of Crypto
Trading big volumes of crypto is just as complicated as buying or selling a large share of company equities on a traditional exchange.
If you need to exchange a large amount of crypto, the trick is to find a way not to crush the coin’s value in case of selling, and not to skyrocket an asset’s price in case of buying crypto.
Bitcoin’s price upsurge of $700 on April 2, 2019, is believed to be caused by a buy order of 20.000 BTC placed by a single person on different exchanges. In today’s article, we’ll discuss the tricks of trading large amounts of crypto.
Who Wants to Trade Large Amounts of Cryptocurrency?
- Major crypto holders known as whales. 16% of all BTC in circulation is in possession of only 100 addresses. Among the biggest crypto holders are funds, miners, early adopters of cryptocurrency and major blockchain projects.
- ICO projects. Some ICO projects may need to convert crypto to fiat to pay for different services.
- ICO token buyers. Some major early investors may want to close their positions or convert tokens to different currencies.
Solutions and Risks Involved in Trading Crypto
There are generally two common ways traders can utilise to buy or sell big volumes of cryptocurrency –
The most common way is to divide the total amount into several parts and sell within a long period of time and/or trade the amount on several exchanges. However, this solution has several drawbacks.
- It can be time-consuming to follow the market and replace the order to make sure it’s not that far down in the order book.
- The second concern is the deposit and withdrawal exchange fees. Some exchanges charge these kinds of fees as a percentage of the sum being withdrawn and for large volumes, the commission may reach significant amounts.
Another popular solution for whales is Over the counter (OTC) trading. OTC desks arrange deals matching buyers and sellers of big sums of crypto without placing orders on the exchange. OTC services are in high demand and its volume is at least as large as total exchange volume.
However, some whales have been cautious of OTC desks due to the fact that only a few of them were providing custody solutions. Others avoid major OTC desks so that they won’t have to pass KYC and can stay anonymous.
Traders are already moving towards multiple automated trading softwares that keep their orders at the bay that market prices are fluctuating at. Since OTC is also a little painful and slow process, these trading bots are much smarter in managing the funds. Such challenges for traders with large sums have encouraged market players to create new market tools so that dealing with big volumes would be easier. A perfect example of such solution would be a feature recently introduced by an automated crypto trading platform TradeSanta.
Features like Smart Order enables users to buy or sell a specified amount of crypto at a certain price level, within a period of time (Time Weighted Average Price or TWAP) or as a percentage of total trading volume (Volume Weighted Average Price or VWAP). All the trading happens on the user’s exchange connected via API. TradeSanta’s Smart Order will take care of technical aspects placing orders and keeping them on top of the exchange’s order book. A trader won’t need to constantly monitor the market and handle accounts on several exchanges. The Smart Order is already available for Binance traders. TradeSanta offers this feature and trading bots for free. You can give it a try without any hassle.