Do you know who the major players are in the crypto space right now?

It’s the “WHALES” aka people with at LEAST several million dollars worth of cryptos in their possession, in “old school” financial terms these are the people known as “High Net Worth Individuals” (HNWI).

These HNWI’s are whales because whenever they make trades in the market they make huge waves due to the sheer volume they’re transacting with.

But who are these whales??

Well, they consist of the early adopters/hodlers of Bitcoin and other altcoins, Venture Capitalists, cryptocurrency hedge funds, investment bankers, and retail investors who got in early to trade or invest their way to millions.

What‘s most notable here is that the majority of the market is still predominantly retail investors a.k.a people who like me and you or what they like to call in old school financial markets the ‘Mum and Dad’ investors.

If we were to rank the investment groups in terms of who currently owns the most market share in the crypto space, my guess is that it would look something similar to this:

Early adopters, hodlers, crypto enthusiasts and experts Cryptocurrency Venture Capitalists and Hedge Funds Retail Investors aka “Mum and Dad” investors or perhaps a more apt name in the Cryptospace would be “Son and Daughter” investors. (Millennials rule this space right now with the average age of Cryptocurrency hedge-fund managers being 26 as per Blockchain Capital survey) Investment Banks and Wall Street

What’s happening right now is that a lot of the traditional old school financial institutions aka the REAL whales such as pension funds, insurance companies, endowment and mutual funds WANT in on this space but they can’t get in.

And even many of the traditional hedge funds, investment banks, and other big name investors can’t, won’t or aren’t in this market yet for several reasons that are covered below.

These institutional investors are the real whales because if you look at the sheer amount of money they handle, it’s a joke compared to where the crypto market is currently at.

Pension funds for example control over $6 trillion in assets yet the crypto market cap hasn’t even touched the trillion dollar mark yet.

“I’m beached as.”

Why Institutional Investors Are Getting Beached

If you went to the Consensus Invest 2017 conference in New York last November you may have heard the market cap of $1 trillion for crypto being thrown around. Well this is what heads of investment institutions agreed would make entering the crypto markets “feasible”.

Anything below $1 trillion would be too small for these fat ass whales to jump in because that’s just how loaded these guys are. At the conference it was also evident that insto investors had strong interest and desire to enter the cryptosphere.

Recently, OMERS, an Ontario pension fund created an Ethereum-focused public company that plans to raise $50 million to invest into Ethereum as well as ERC20 tokens.

A Bubble? Ha! We’re Only Just Getting Started

At the current time of writing the total market cap of the crypto market has been fluctuating around $550 billion. This might seem like a lot but when you take into consideration the size of other financial markets it’s like comparing a Chihuahua against a Great Dane.

Market Cap Comparison:

Cryptocurrency = $550 billion

Dot Com Bubble at it’s peak = $3 trillion

Gold = $7.7 trillion

Global stock markets = $73 trillion

Global real estate = $217 trillion

Derivative markets = $544 trillion

Okay you get it, these whales have a lot of money to play with but they can’t jump into the ocean just yet even though some of them may desperately want to.

Why’s that?

Lack of laws and regulations — if you’re investing other people’s money you can’t just take it and“invest” it all on black at the casino. Security and custody of cryptocurrency assets — these people don’t know how a blockchain works let alone how to securely store private keys. Even if they did, these methods would not stand up to compliance with SEC’s rules and regulations in terms of custody. The market is too small and there’s no lubricated way for these whales to slide into this small pool without causing huge waves and splashing liquid over everybody.

In regards to (1) and (2) solid progress is likely to be made on these fronts by I would presume at least the second half of 2018. What I really want to talk about in more depth here is point 3.

“Because institutions are the largest force behind supply and demand in securities markets, they perform the majority of trades on major exchanges and greatly influence the price of securities.” — Investopedia

Opening The Floodgates for Whales and Seamen to Come Through

You see, if an insto investor came into the crypto market right now with $100B to play with, at our current market cap of $550B this already represents almost 20% of the entire market!

Can you imagine what would happen if $100B was injected into this market? Not only would everything shoot up like crazy but people would FOMO hard and also want to get in on the action causing prices to surge even higher.

The impact institutional investors and real whale money would have on this sector is enormous.

In fact, we’ve already witnessed and experienced some of these effects with the introduction of Bitcoin futures and this is actually the only real way these investors are able to “invest” and make money in this space at the moment.

That is until they get access to dark pools…

What are dark pools?

Dark pools are trading exchanges where you can trade shares or other assets through a HIDDEN order book.

These things aren’t called dark pools because the people who use them are so filthy rich they can’t see past the bands of money piled up in front of them.

No, it’s because when you trade or exchange on a dark pool, no one can see the buy or sell orders waiting to be fulfilled.

It’s all purely anonymous and “off the books” — or at least off the order books.

In this context we should really be referring to it as dark oceans because generally only the biggest baddest creatures swimming in these “pools” are whales and sharks.

What’s the point of using a dark pool?

Well, it allows whales to trade cryptos without severely impacting the market prices.

If they want to buy a shit load of Bitcoin at $11,000 and people see a buy order on the exchange for $100 million this buy wall would expert a strong upward pressure on prices.

This is why, in my opinion, when you start hearing about institutions finally getting into this space, that’s when you might want to start considering when the bubble is going to pop and thankfully you’ll know when these players do enter because of the effect they will have on the market.

The Republic Comes to the Rescue

Aside from dark pools lubricating the entry point for instos by allowing for trades to be made with minimal price slippage, another major factor stopping them from entering is the SECURITY and TRUST that whoever they trade with won’t screw them over and that whatever exchange they trade on doesn’t just get hi-jacked or exit-scams.

The truth is since 2016 dark pools have already been available on exchanges such as Kraken and TradeZero. So why haven’t instos come into this space already?

Well, who even uses Kraken or TradeZero? And as mentioned earlier, there are issues around the custodialship of crypto assets as well as the laws and regulations that must be complied with.

The other major aspect with these exchanges however is that they aren’t major players in the game, they aren’t insured, nor do they offer a great deal of trust.

If these instos trade on these exchange their funds are not guaranteed or secured if for some reason it gets hacked, stolen, or lost whilst they are trading.

If these instos are going to come into this game, they need to cover their asses on all fronts.

They can’t come into this market with other people’s money and then say “Ah shit, yeah, uh about that $200 million of yours? It got rekt, you got justed by the damn exchange, sorry bro!”

This is where Republic Protocol comes in to save the day.