Coinbase is ready to enter the next phase of being a global cryptocurrency exchange. While they will not drop support for consumer-based trading, they are trying to make inroads among institutional investors. Offering block trades is one way of achieving this goal. Providing users with access to large-scale trading without disrupting the general order book is also a viable approach.
Coinbase Takes an Important Step
Institutional investors and major traders continue to show increasing interest in cryptocurrency. As such, trading platforms and exchanges will need to make adjustments to accommodate that type of trading. Coinbase is doing exactly that by launching a new feature known as block trading. Additionally, the firm wants to open an office in Chicago, which may prove to be a major hub for Bitcoin trading in the near future.
Block trades involve using an exchange’s order book without influencing it directly. They are somewhat similar to the concept of dark pools, although they work slightly differently. For Coinbase, the goal is to entice larger investors, trading firms, and even hedge funds to use the company for all their cryptocurrency trading activities. Whether or not it will be successful is a different matter altogether.
Even though many people still consider Coinbase to be a startup, it is evident that the firm is looking to expand well beyond this label in the near future. They aim to compete with institutional investor-oriented exchanges such as Gemini and other OTC firms. Doing so will be a tall order, but offering block trades may go a long way.
Even though Coinbase has been focusing its attention on Wall Street traders for some time now, this latest venture is perhaps the biggest effort yet in this regard. The launch of GDAX has also made a positive impact on the market, and it seems block trading will apply to both Coinbase and GDAX.
Setting up a new office in Chicago will also help achieve Coinbase’s goal. Although most cryptocurrency trading firms seemingly ignore Chicago, it appears the city will prove to be quite important for this nascent industry. CME Group, Cboe Global Markets, and the Chicago Stock Exchange are all located there as well, which makes it a natural fit for Coinbase.
Even though all of this seems quite positive, it remains to be seen how much of an impact Coinbase will make on the institutional trading industry. Attracting bigger investors will only lead to more price speculation and, most likely, very bearish pressure on Bitcoin and other cryptocurrencies. Only time will tell how all of this will play out, as the plans are still in the early stages. Wall Street will pay attention to Bitcoin and altcoins for quite some time to come; that much is almost a guarantee.