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November 25, 2020

In Conversation With

Why institutional investors are mostly interested in BTC-ETH and stablecoins with FalconX


Teana Baker-Taylor
General Manager UK,
Prabhakar Reddy
Co-Founder, FalconX

Digital asset trading platform FalconX recently raised GBP 17 million in a funding round. Backed by the likes of Accel, Accomplice and Coinbase, the firm services institutional investors including some of the largest hedge funds, prop trading funds, OTC desks, payment gateways and miners around the world. They exist to deliver best-in-class pricing, which is very tight spreads with zero slippage and no hidden fees primarily to institutional investors.

FalconX Co-Founder Prabhakar Reddy commented on whether or not institutional investors have arrived, saying:

(16:00) “We’ve all heard that narrative since perhaps late 2017, 2018 right? So when we entered the market there were lots of inefficiencies and they were quite glaring and visible. But I think that ever since FalconX has entered the space, we have actually seen quite a difference… For example, if you look at spreads of OTC for institutional investors, about a year ago they were 10x of what they are today. That made it very difficult for a sophisticated institution to see the industry as a mature market. We still have a long way to go,” said Reddy, adding that FalconX provides a level of trust and transparency that experienced institutions looking to come into the space need.

Reddy also explained how institutional investors are mostly interested in BTCD (Ck) and stablecoins, saying:

(17:04) “If you look at what the majority of our institutional clientele have been trading, it’s primarily BTC-ETH and mostly stablecoins. So we offer probably the top five in stablecoins. But as the market expands, we’ll have to see. You know because the market needs liquidity and depth in order to cater to institutions. A lot of the other coins don’t. So it’s primarily concentrated more heavily on BTC and ETH right now.”

FalconX’s core business is spot trading and they will have some announcements soon. They plan to enable new use cases that build on the firm’s liquidity. Reddy commented on the global economic slowdown due to COVID and what it means for crypto.

(18:30) “From an overall industry perspective, you’re right, we are in a very interesting economic environment. Investors around the world are starting to look for protection against what I would say is inevitably monetary inflation….So big players like Paul Tudor Jones…are starting to dip their toes into the market as a hedge against the macro conditions.”

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Gerelyn Terzo
Gerelyn caught wind of bitcoin in mid-2017 and after learning about the peer-to-peer nature of Satoshi's creation has never looked back. Previously she covered institutional investing and fintech for several major trade publications. Gerelyn resides in Verona, N.J.

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