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The Value of Institutional Cryptocurrency Trading in the Modern Market

institutional cryptocurrency trading
Source: PEXELS

Jul. 9 2024, Published 3:00 a.m. ET

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Despite its perceived status as a newcomer to the trading world, cryptocurrency has been a part of our economic ecosphere for much longer than many realize. Initially praised as a new wave of economic innovation a few short years ago when its popularity boomed, cryptocurrency is now often decried and looked upon with a mix of scorn and shame from mainstream media. As a result, it has fallen out of favor with the general public, taking on a negative connotation. However, while many think of it as a fad that will be quick to fade, it's important to note that cryptocurrency and retail and institutional trading have been around for far longer than you might realize.

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The first instance of cryptocurrency dates back to the '80s when the young David Chaum invented the DigiCash system and introduced it to the world in 1989. At that time, before computers became a household regularity, the system was ambitious but only somewhat feasible. It took decades for the rest of the world to come around, but in 2009, when Bitcoin was introduced to the market, cryptocurrency finally began to take. In 2024, cryptocurrency is one of the most controversial and topical items on the market. However, many may not yet realize the difference between retail and institutional crypto trading.

Differentiating the Two Types of Crypto Trading

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Wealth, social status, and vocation define these two distinct classes of cryptocurrency traders. Retail cryptocurrency trading is often done through exchanges, which entail much smaller amounts of potential wealth. Conversely, institutional cryptocurrency trading is conducted by much larger corporations or hedge funds, acting with much more significant sums of money and doing so to benefit their institution.

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Retail cryptocurrency trading can be thought of as a hobbyist's approach to the market. This trader class is generally populated by individuals with full-time occupations unrelated to the cryptocurrency market in particular. These individuals are removed from cryptocurrency trading as a profession but have taken up an interest in the market and used their own funding to partake in it. In many ways, the cryptocurrency trading market can be thought of as equivalent to the stock market or even the lottery. It is a system in which many participate recreationally, with the daydream that they may one day passively earn big winnings from it.

The institutional crypto trading platform is quite the opposite; just like in the stock market, this is done by people working for institutions whose entire business involves cryptocurrency trading. In this way, 'institutional' is a quintessential encapsulation of this form of trading.

Ultimately, despite its spotty reputation and questionable long-term worth, cryptocurrency has been around much longer than many give it credit for. It looks like it will remain a vital part of the U.S. economic marketplace for years. In this way, understanding the critical differences between the types of cryptocurrency trading and who operates within these separate lanes is crucial.

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