Trading big crypto volumes consist of several difficulties. Do you know how the market will react if you trade with big Crypto volumes? Will the market collapse? In the whole section, we will see the use of volumes in the cryptocurrency market along with how you can trade cryptocurrencies with massive volumes and what will be the effect on the market.
March 16, 2020 | AtoZMarkets.com – Trading with big crypto volumes at exchanges has two general purposes. First, it helps to avoid slippage in a cryptocurrency’s price for a significant sale. Second, the process ensures the trustworthiness of a cryptocurrency platform. Moreover, trading high volumes are also an important indicator of price movement. In most cases, big volumes result in a bigger move in any direction.
Many people think that trading big crypto volumes are institutional things. Therefore, retails traders do not have anything to do with it. Another misconception about the cryptocurrency market is that trading with big crypto volumes can collapse the cryptocurrency market.
These are absolutely wrong!!
In the following section, we will see how volumes work in the cryptocurrency market along with how you can trade big crypto volumes.
Use of Volume in Cryptocurrency
Volume is the foremost important metric for a cryptocurrency, due to the amount of the way it is often weakened. From volume, we can identify the direction and movement of a cryptocurrency. Therefore, it is an important price indicator for traders. However, you can examine volumes in minute detail. You can also track volume data from CoinMarketCap by the last 24 hours, last week, or last 30 days. This helps to reveal the coin’s recent swings that are an aberration or the norm. A coin with frequent movement and high volume won’t attract the attention of traders. A coin with less volume and heavy trading may indicate that there’s something supporting the worth from behind.
You can also examine the volume from several exchanges. This matters as several exchanges have several prices. Moreover, there are many geographically-focused exchanges, for example. Kraken is largely a European exchange where OKCoin was functioned in China. Volume by exchange indicates where the buyers and sellers of a coin are staying. Exchanges without fee allow traders to send coins back and forth for free.
In a normal sense, most traded coins are the most popular coins. If you see the Coinmarket.com ranking in terms of volume, you may see the Bitcoin, Ethereum and Ripple at the first position. There is nothing to surprise. However, if you scroll down, you may see some relatively less- known coins that have enormous trading volumes. Neo and Dash is the perfect example of that. Moreover, Monacoin is relatively unknown, but there are remarkable changes in the price of the coin.
Is it Possible to Transfer a Large Amount of Crypto?
If you want to transfer a large amount of crypto, you may face a bunch of difficulties.
The first challenge you have to face is the limit of transactions. Most of the crypto exchanges have daily and monthly limits on withdrawals. For example, one of the major U.S. exchanges, Coinbase has a $10,000 daily limit for its Pro Users. On the other hand, Binance offers a 2 BTC daily limit to all users. However, investors can make a transaction with a maximum of 100 BTC via Binance with completing the Know Your Customer procedures.
Meanwhile, Coinbase pro exchange offers $25,000,000 per day as a limit to skillful traders. Moreover, Binance could also extend daily limits upon personal requests. Overall, the major exchanges can allow you to trade up to $25 million per day. However, this limit is not fixed as you can increase it by consulting the exchange personally.
There is the fact that any cryptocurrency trade with big volumes may affect the market significantly. Therefore, it may encourage algorithmic traders to start buying and selling at that time.
Biggest Crypto Transaction in the History
In the cryptocurrency industry, any movement above 50,000 BTC is called as “whale movements”.
One of the biggest cryptocurrency transaction happened in November 2011. According to Blockchain.com, the amount of a single transaction was 500,000 BTC. That time the worth of the transaction was $1.3 million. If the transaction happened now, the amount would be valued at $4 billion.
Secondly, another bigger cryptocurrency transaction happened in 2013. That time the world’s biggest crypto exchanges, Bitstamp transferred 194,993 BTC in a single day. The worth of the transaction of that time was $149 million.
However, the amount of transactions does not rely on huge transaction fees. For example, there was a 29,999 BTC transfer in 2018 with only $0.01 fees. It basically needs time to make a faster transaction with a higher charge. On the other hand, traditional transactions via banks or financial institutes require a high amount of change with hidden fees.
Trade Crypto with Big Volumes
As cryptocurrency trading is new in the world, people are sometimes scared about making crypto transactions with bigger volumes. Moreover, traders often believe that there are many giant investors in the cryptocurrency market who can usually make big crypto transactions only.
However, there are some ways to make crypto transactions with bigger volumes.
- Dividing transactions into several parts or using several crypto exchanges is a moderate way to trade cryptocurrencies with big volumes.
- Any cryptocurrency exchange with a bigger volume in one moment may cause the markets to panic, therefore, forcing prices to change. So, dividing the big crypto trading volume into several parts and selling it over a long period of time is a moderate way. However, there is a risk that the cryptocurrency market is ever-changing and taking a long time may affect the transaction value.
- Another way is to trade big crypto volumes is the use of multiple exchanges. This process is very time-consuming, as you need to spend a lot of time to make transactions from different exchanges with considering their fees.
- Another way is to find a counterparty who needs the exact amount of cryptocurrency that you are trying to sell. Therefore, you can make a direct deal with them in a secure way. It is not recommended to trust someone blindly to make transactions.
For cryptocurrency traders, volume indicated the sustainability of the price movement of a cryptocurrency. A dramatic price increase with low volume rebound suddenly. Therefore, traders should find movements that have support from volumes to find the actual price direction.
Solutions for Trading Big Crypto Volumes
As we have seen that trading big crypto volumes are often challenging that requires extra time and effort. However, there are some solutions to this. Crypto auctions, over-the-counter (OTC) and algorithmic trading desks are made to transfer large amounts of crypto.
- By using crypto auctions, you can trade your crypto assets directly without splitting them into parts. However, Orders are only available for five most trader cryptocurrencies — Bitcoin, Litecoin, Ether, Zcash, and Bitcoin Cash.
- Another solution is the use of trading bots. It is a process that will automate the process of splitting transactions. For example, TradeSanta is cloud software that provides service to you to buy or sell big crypto volumes on major exchanges, like Binance and HitBTC. Customers of TradeSanta can trade the specific amount of crypto within the specified price limited period of time. In addition to that, the users do not have to waste time splitting up amounts or orders. TradeSanta solves technical aspects related to big crypto volumes and keeps orders exchange’s order book as a first priority
The growing demand for OTC trading influenced major crypto exchanges to launch their own OTC.
After the above discussion, we can come to the conclusion that it is possible to trade big crypto volumes by using third-party services besides our own precautions.
As the cryptocurrency market is one of the most emerging markets now, there is a stronger possibility in the future of more market establishment in cryptocurrency. Moreover, central banks are also keen to adopt their own cryptocurrencies. Therefore, that time is not far where the cryptocurrency market will be the biggest competitor of the Forex market.
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