Institutional OTC Trading Soars as Memecoins Attract Big Players

Market maker Wintermute has reported a significant 240% annual increase in activity from traditional finance firms on its over-the-counter (OTC) trading desk, signaling a shift in the crypto trading landscape.

The firm’s latest report highlights the growing involvement of these institutions, driven by regulatory clarity and policy changes.

Key milestones in 2024 reshaped institutional participation, including the SEC’s approval of spot Bitcoin ETFs and the election of a pro-crypto U.S. president. These developments bolstered confidence among traditional finance players, fueling demand for discreet trading options that bypass the inefficiencies of exchange-based transactions.

Wintermute’s OTC desk recorded a fourfold increase in trading volumes compared to the previous year. A single-day volume of $2.24 billion in November 2024 broke its previous weekly record of $2 billion from 2023, reflecting a surge in large trades aimed at avoiding market disruption. Retail brokers also saw a remarkable 549% growth, further indicating broader institutional interest.

Memecoins became a surprising focus for traditional finance, with their OTC trading volume climbing by 210% and accounting for 16.2% of Wintermute’s total volumes, up from 7.3% in 2023. This shift suggests institutions are exploring higher-risk assets in pursuit of greater returns, even as major cryptocurrencies experienced a slight decline in trading activity.

However, the increasing presence of well-funded institutional players has created challenges for crypto-native firms. Smaller competitors face intensified competition as traditional financial institutions leverage their scale and resources, reshaping the dynamics of the OTC market. The rise of institutional dominance may leave smaller players struggling to maintain their foothold in this evolving space.