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Binance Reveals Crypto Investment Strategy of Institutional Players

November 25, 2019

New analysis from global cryptocurrency exchange Binance reveals the trading strategies of its most significant VIP and institutional clients.

The company’s research team reviewed data from 76 firms, funds and institutions with crypto allocations ranging from $100K to over $25 million.

Key Takeaways

  • The three most commonly followed investment strategies were high-frequency prop trading (35.5%), technical analysis (25.0%), and market-making (19.7%).

  • 54% of respondents kept their cryptoasset portfolio between 1-10 coins, a characteristic reflected across all investment and trading strategies.

  • Regulations remained one of the critical aspects of interest, both as a risk and a potential growth driver for the future of this industry.

Researchers also focused on the use of the controversial stablecoin Tether. According to the report,

“USD Tether (USDT) remained the most widely used stablecoin (40%), for reasons quoted such as greater liquidity and higher market capitalization than its peers. While alternative options are also being used, stablecoins backed by exchanges, like USDC (Coinbase, Circle) and BUSD (Binance), seemed to spark more prominent interest from many respondents than other (than USDT) fiat-backed competitors.”

Regarding Bitcoin versus the altcoin market, institutional and VIP clients expect BTC to maintain a market dominance of 69% by the end of 2019.

BTC dominance is currently teetering around 66.4%, at time of writing, far outpacing Ethereum in second place at around 8%.

The Binance team says different types of traders and investors reference research reports to inform their decisions, with long-term traders relying more heavily on research than high-frequency proprietary traders.

“55.2% of respondents confirmed that they reference published research reports to inform their investment decision making. Nearly all traders following long-term value investment and technical analysis strategies are reading research reports from Binance Research, Messari, CoinGecko, and other exchanges’ research desks. With that said, market-making and high-frequency prop traders do not often read research publications to guide their strategies.”

With over $1.7 billion in daily trading volume and a trust score of 10, Binance is currently in first place on data aggregator CoinGecko’s trust score exchange ranking.

You can check out the full Binance report here.

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