How to Trade Big Crypto Volumes, Explained

Why is everyone discussing big crypto transactions?

Actually, such transactions might be a contributor to the uptick in crypto markets.

In early April, Bitcoin (BTC) saw the first major recovery in months, when the price of the world’s top coin rose from around the $4,000 mark to over $5,000. The industry was actively discussing the reasons behind the unexpected surge. While some insiders — such as Binance CEO Changpeng Zhao — were clueless about the catalysts of the spike, others mentioned the April Fool’s Day story on the prank-approval of a Bitcoin exchange-traded fund and even Brexit as possible triggers.

However, some believe that mysterious crypto orders could be accountable for the market recovery. According to Reuters, the gain was probably triggered by a 20,000 BTC order (over $100 million, at that time) that was spread around United States-based crypto exchanges Coinbase and Kraken, as well as Luxembourg’s Bitstamp.

Big volume transactions could kick-start a frenzy of algorithmic trading — a method that uses automated software to detect trends and determine when trades should be made. As the mechanisms recognized the gigantic order, the automated trading started, forcing the prices and volumes to rise for several days in a row, with Bitcoin briefly testing the $5,300 mark.

What were the largest transactions in crypto history?

Major crypto transactions (over 50,000 BTC) — dubbed “whale movements” in the crypto industry — happen each year, from time to time.

Setting aside the amount of coins transferred during major crypto hacks, the largest Bitcoin transaction ever was made in November 2011. According to cryptocurrency statistics provider Blockchain.com, back then, someone transferred 500,000 BTC, worth approximately $1.3 million at the time, to a single address. The same amount today would be valued at $4 billion.

Another major crypto transaction, titled “Bitstamp Audit,” was made in November 2013. A now-defunct address of one of the world’s first crypto exchanges, Bitstamp transferred 194,993 BTC, worth $149 million back then — or $1.6 billion today.

It is worth noting that big crypto volumes are not necessarily related to huge transaction fees. For instance, in October 2018, a Bitcoin investor sent 29,999 BTC (worth about $194 million at that time) — the largest BTC transaction in recent months — with a $0.01 fee. Meanwhile, those who transfer fiat money via traditional payment institutions, such as banks, might face hidden fees, which makes it hard to predict the particular cost of a transaction.

That’s impressive, but who is trading these millions in crypto?

Normally, big transactions come from the so-called whales — early adopters of cryptocurrency, miners or funds.

As per recent reports, there are approximately 100 Bitcoin addresses that currently possess over 16% of all coins in circulation. According to Bitcoin Rich List, which is provided by crypto statistics website BitInfoCharts, five of them now have 571,958 BTC, worth over $4.7 billion as of today.

Recently, a large amount of long-inactive Bitcoin holders — defined as those who haven’t transferred their Bitcoin for between six and 30 months — began to transfer their coins. Experts believe that whales, especially the long-dormant ones, could be accountable for crypto price action.

Moreover, recent reports mention institutional investors as the biggest buyers of cryptocurrency transactions worth over $100,000. Traditional investors and buyers, such as hedge funds, accounted for the vast majority of investments (66%) in crypto in the fourth quarter of 2018, according to the latest study performed by digital asset management fund Grayscale Investments.

Despite the end of the hype over initial coin offerings (ICOs) in 2017 and 2018, ICO holders and buyers still possess significant amounts of crypto and can also be included in the list of crypto whales. Although the first quarter of 2019 saw fewer ICOs raising funds compared with the fourth quarter of 2018, the amount of funds raised is still significant — totaling over $1 billion.

I want to transfer a large amount of crypto. Are there any potholes?

In cases when you want to transfer a large amount of crypto, you could face a bunch of difficulties.

The most obvious one is that most cryptocurrency exchanges have daily and monthly limits on withdrawals for general users. For instance, major U.S. exchange Coinbase has a $10,000 daily limit for its Pro Users, which can be increased to $25,000. Meanwhile, Malta-based Binance offers a 2 BTC daily limit to all users and 100 BTC to those who pass all the necessary Know Your Customer procedures.

At the same time, by using the Coinbase Pro exchange, a skillful trader can increase the limits up to $25,000,000 per day. Binance could also extend your daily limit upon personal request. To sum up, both major exchanges might allow you to trade up to $25 million per day. However, you will still have to set this limits by interacting directly with the exchanges.

Moreover, as previously explained, large crypto transfers might significantly affect the market. As a big order appears, the prices may skyrocket and force algorithmic traders to start buying and selling.

Are there any tricks for trading big crypto volumes?

Dividing transactions into parts and using different crypto exchanges is a common way to trade big volumes.

If someone sells a huge amount of crypto at one moment, it could possibly cause the markets to panic, forcing prices to change. Therefore, dividing a large transaction into many parts and selling it over a long period of time is a common trick for those who want to trade large amounts. Still, you might get less money for later transactions, as the value is pushed down by selling more than the market demand can handle.

Another way is to sell your crypto on multiple exchanges. This strategy, though, is very time-consuming, as you will have to spend a lot of time splitting the transaction between different exchanges and calculating each one’s fees. 

Finally, some traders recommend finding a counterparty who needs to buy the exact amount of crypto you are trying to sell and then setting a deal directly.

Has the crypto industry developed any type of solution for such transactions?

Crypto auctions, algorithmic trading and over-the-counter (OTC) desks are designed to transfer large amounts of crypto.

In cases when you want to trade your crypto assets directly, without splitting them into parts and calculating fees, the daily auction held by Gemini — a U.S.-based, regulated crypto exchange — is a popular way to do that. Orders are currently available for five major currencies — Bitcoin, Ether, Zcash, Litecoin and Bitcoin Cash.

Another solution is to use trading bots to automate the process of splitting transactions. For instance, TradeSanta is a cloud software that allows you to buy or sell large amounts of crypto on major exchanges, such as Binance and HitBTC, while minimizing the impact on the market by making the transactions smaller and distributing them in time. By using smart orders, TradeSanta’s customers can trade a desired amount of crypto within the exact price limit during a specified period of time. In addition to this, the user doesn’t have to waste time splitting up the amount or placing orders, as TradeSanta takes care of the technical aspects and keeps the orders on top of the exchange's order book. 

OTC trading is also gaining popularity at the moment. These off-exchange desks match buyers and sellers of large amounts of crypto without placing orders on an exchange. As Binance CEO CZ said in an interview, the demand for such services is at least as much as the total volumes reported by crypto exchanges, which equals up to 50% of the total volume that is not displayed on CoinMarketCap.

The growing demand for OTC trading has forced major crypto exchanges to launch their own OTC desks despite the crypto winter. However, this way to trade large amounts of crypto involves several risks, such as double spending, phishing and fake agreements. Therefore, the trader has to be skillful enough to use OTC desks.