The digital asset exchange run by the Winklevoss twins is now introducing a service that allows for trading outside order books. Block trading or block order will enable this, as well as enable the trading of cryptocurrencies in large quantities.
Assets can be traded for prices agreed upon by two parties – a common practice by bigger players in the market. This effectively allows Gemini to compete with other companies that focus on hedge funds and institutional buyers who benefit most from a more stable alternative to acquiring assets.
Gemini announced that it will be going live by April 12 at 9:30 a.m. in New York time. Anyone involved in the program would benefit from great execution and price discovery. Information will be made available on Gemini’s market after transactions are executed.
Orders in large quantities potentially move the market in ways that are harmful for both the trader and the rest of the market. To avoid these situations, institutional traders and hedge funds turn to block trades which are privately done off the exchange. Customers can place a block order and fill out the needed details for it to be executed and receive no additional information.
“Block orders do not interact with our continuous or auction order books. Trade information will be published via our market data feeds ten minutes following the execution of a block trade.” Gemini said in a blog post.
In the past, block trading services were only available via over-the-counter trades. This method of block trading has already been very profitable for providers of the service. Goldman Sachs for example has facilitated bitcoin payments via OTC trades with amounts of up to $4 billion per month over the past year, according to Reuters.
Having Gemini offer a Block Trading service will now allow market makers or ‘whales’ to trade with more price stability and may even grab some market share from existing digital asset exchanges offering these services.