The Gemini exchange is constantly evolving and adding new features. Considering that this platform is mainly aimed at institutional investors, it is only normal that it adds features and tools which benefit those users. In particular, the introduction of block trading is pretty intriguing.
Explaining the Concept of Block Trading
Cryptocurrency users who have paid close attention to how exchanges operate may be aware that not all trades occur on the main order book. In fact, we have seen several companies embrace the concept of dark pools, which allow for very large trades to take place off the order book. This is usually done to prevent market makers and takers from influencing prices too much.
It now seems Gemini is trying to implement something similar, although they are calling it something entirely different. More specifically, their block trading feature allows users to buy or sell a specific quantity of a particular cryptocurrency. Users also need to enter a minimum required fill quantity and a price limit. With this information, it becomes possible to trade vast quantities of cryptocurrency without disrupting the actual order book.
In terms of liquidity, this will introduce a lot of interesting changes on the Gemini exchange. Finding new sources of liquidity has always been a positive development in the world of cryptocurrency. Despite the popularity of Gemini, even that trading platform can have days on which liquidity is very difficult to come by. With this new block trading option, users should have an easier time conducting large trades regardless of order book availability.
This new feature is scheduled to go live today. It will be quite interesting to see how that plays out, as it remains unclear how much interest there will be in it. It is also worth noting that market makers will not receive information pertaining to price limits, which should make this a bit more private compared to traditional order book trading.
To keep the transparent nature of Gemini intact, the company will broadcast the block orders to participating market makers simultaneously. This should make it a lot easier for big traders to see their orders filled, although it will still depend on how many people check out this feature in the future. Having more ways to trade cryptocurrency is never a bad thing by any means.
For the time being, it will be interesting to see if other exchanges decide to take a similar course of action in the near future. It would be good to see more platforms offer high-liquidity trading beyond the regular order book, as it would help reduce overall speculation and manipulation. Generating interest in features such as block trading will not be easy, though.