Winklevoss twins-founded cryptocurrency exchange Gemini on Monday announced that it is introducing block trading facility in a bid to cater to the increasing number of institutional traders trying to trade with large amount especially hedge funds.
Gemini’s order book
Gemini’s block trading service will go live on April 12 at 9:30 am (EST). This feature will allow the customers to book high-value orders which will not appear on the exchange’s trade book until they are confirmed. The exchange will publish the trade information on its data feed every 10 minutes after the trades are executed.
Moreover, there is a minimum threshold of 10 BTC or 100 ETH to participate in block trades.
What is Block Trading?
The publically open trading exchange is very sensitive to high-value trades. Moreover, most of the exchanges maintain a central limit order books to keep all trades under a certain size and limit based on the demand for the stock or asset. Any order beyond these limits often hurts retail traders as it generates a false signal of market movement.
To overcome this barrier, exchanges deployed block trading. All lock trading orders are executed outside the primary order book of the exchange and are settled privately between the involved parties.
Block trading companies have recently gained massive popularity in Asian trading hubs such as Hong Kong and also in Australia. According to Bloomberg, Circle Trade is directly moving more than $2 billion in digital asset every month.
In an official blog post, Gemini explained: “In accordance with our commitment to an equitable, transparent, and rules-based marketplace, block orders will be electronically broadcast to participating market makers simultaneously, ensuring best execution and price discovery for those participating in the program.”
Recently, we have seen massive market movement due to the dumping of assets by crypto whales. A massive sell-off by a Mt. Gox trustee single-handedly crashed the price of Bitcoin to nearly $6,000.
Now with block trading options present, institutions with massive crypto assets can trade without the concern of causing a crash.