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Institutional Investors to Drive Growth in Cryptocurrency Trading
Institutional investors will play a more important role in the cryptocurrency trading market, Bakkt declared Wednesday May 15 when announcing its latest quarterly results.
Bakkt, which provides custody, trading and access capabilities to the crypto economy, said in a statement presentation published on Wednesday that this increase in mainstream crypto adoption was sparked by the Security and Exchange Commission(SEC) of Bitcoin exchange traded funds (AND F).
In the quarter ending March 31, cryptocurrency trading volume increased 324% from the previous quarter, “driven by exceptionally strong customer trading activity,” the presentation said.
“As our first quarter trading volumes show, we have started to see positive signs in the market and the overall demand environment is improving, with increased industrial activity, higher part prices and volume higher overall retail transactions.” Andy MainPresident and CEO of Bakkt, said Wednesday during the company’s quarterly earnings conference call.
Institutional investors in this market are looking for a purpose-built crypto trading platform that will fit their needs and priorities, as opposed to the existing commercial market that was built primarily for retail investors, according to the presentation.
“The cryptocurrency trading industry was built primarily for ordinary retail investors who use a central limit order book trading structure,” Main said on the call. “Meanwhile, institutional investors offering Bitcoin ETFs are increasingly discovering that the retail central order book structure does not meet their needs at scale.”
Bakkt aims to take advantage of the opportunity this presents by developing a “foreign exchange-like” electronic communications network (ECN) called BakktX which will be designed as a crypto trading platform for institutions and will offer high performance, low latency and low cost. says the presentation.
The BakktX trading platform will execute trades in real time, leverage Bakkt’s network of liquidity relationships and have a low fee structure intended to encourage trading volumes, according to the presentation.
“We believe this business technology enhancement will strengthen our existing relationships and open the door to new customers who demand the most from their infrastructure providers,” Main said on the call.
Alongside the expansion of its products and solutions with BakktX, Bakkt aims to focus on expanding its customer network, deepening its existing relationships and continuing to improve its cost structure throughout 2024, a the company said in the presentation.
On May 2, Bakkt reduced its workforce by 20% as part of a restructuring initiative this will result in cash savings of $7 million in 2024 and annualized cash savings of $13 million, according to the presentation.
“While difficult, these decisions are critical as we move toward profitability and reallocate our strategic investments to areas of growth,” Main said on the call.
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