Yeah, you heard me.

Well, is it?

Institutional trading vs. Retail

Retail investors or traders, are you and me. We are the minnows, small fries, carps, often goldfish, and sometimes upwards to a shark (Yes, I'm aware one of these things isn't even a fish, but they DO go well WITH fish, just ask the Brits!). We are the individual trading on their own.

The institutional trader is trading an account, managing/representing a whale, a fund, mutuals and etc. etc. etc. big stuff. Often, the growth in institutional trading is a sign of whether something is growing in legitimacy and interest. This is happening in crypto. Therefore, that is good.

You probably expect the article to end there, dontcha? Nope!

There's more to it than that!

(see below)

I often get a beneficial view from the inside out when learning about some extremely niche topics and the various angles to said projects. As a trader, I study the charts and use indicators constantly. I get into a rhythm of what different coins are doing and why. I also study the crypto news, world news, politics (because people are weird and buy and sell stuff based on what talking heads have to say) and I care about the direction of this new-asset-class-category. 

When we see more ETFs (exchange traded funds), more leveraged positions, borrowing and lending (DeFi), crypto-backed credit cards, stocks pegged for coins, better volume on decentralized exchanges and the sort, we know things are headed in the right direction as it pertains to interest and growth. But, equally I care about that growth coming from the right place. If we ended up with a $700,000 Bitcoin, a lot of us would be very happy, but if it meant that the entire crypto market operated exactly like the stock market and traditional banking, I'd kinda feel like we killed the one thing that made it better and different from all other assets.

The ideals of crypto matter just as much as earning off of them. Some of those ideals were foggy and jaded from the start. Privacy has always been debatable. Decentralization has always been a partial myth at best. Not your keys, not your coins has always come with the responsibility that could easily be superseded by a fault in the private wallet programming or human error alone. But, a community with the willingness to brave those storms in order to take their finance into their own hands, stack them sats and smile, has been a good thing.

So, here it is; the individual investor, or retail investor, needs to matter more than institutional trading. We all, individually, wanna be whales, do we not? The issue that I see happening is on the exchanges. Particularly from my perspective, the United States is leading the way in certain facets of crypto that the world does not realize. It isn't on the books and in the stats as the biggest volume, the largest market capitalization or even the number of sign-ups. But, that is largely because a massive gap between retail and institutional exists, and U.S. investors and traders are a digital island without a home. We have some great exchanges like Kraken and the Winklevi's Gemini, but if it's U.S., it's probably also higher in fees. In fact, 50% more fees is the average. Yes, there are tiered options if you do, like $1B in volume in 30 days, but most of us won't get there without as much an advantage as possible.

Therefore, you will find that most U.S. investors or traders who are serious about mad gainz, are trading on Asian exchanges who still allow a pass on KYC, or know your customer. Their fees are lower, their (faked) volume is much better, meaning the spread is better, also meaning that the small fry has a chance to take advantage of some of the same moves that whales and institutions get a piece of. But, oh the better choices we would have if the U.S. market, thus others as well, were to open their friendly doors to individuals in the same way they are welcoming the huge accounts. We'd love to have the same incentives too, please! OTC trading for smaller accounts would only go to increase volume and tighten the spread on smaller U.S. exchanges. Offering incentives to get smaller accounts to reduced fees would help us out a lot. 

If you think about markets that suffer shortsightedness resulting from greed, it wouldn't be hard to find a brick-and-mortar equivalent scenario. Imagine trying to open a Gucci store right next to the local Wal Mart. It's a no-brainer know your crowd. Would you like to gamble on bulk or pray to catch a whale? I'm guessing that Wal Mart can rake it in with thousands of small purchases, hitting their margins just fine, while Gucci might have a killer sales day here and there, but they're mostly going to be paying the rent and electricity to serve window shoppers that couldn't afford the price tag let alone the actual item. It isn't a perfect analogy, sure, but it makes the point that having thousands of Americans trading with American exchanges who offer us competitive choices would make us feel welcome at home.

Think about it: I personally believe the U.S. has gone completely in the wrong direction hammering down on regulation. In one sense, it is expected of us to do certain things with the SEC, FinCen etc. that other countries won't do. The United Nations tends to place us in that spot. I like to say that we tend to be used as the finance sector's bullet-proof-vest for the rest of the world. But, it certainly makes everyone hate us a little bit more, and again the individual suffers for it. Almost every one of the hundreds of good exchange options say everything the retail investor wants to hear, followed by "we don't allow Iran, North Korea or the U.S." Ouch! What'd I ever do to you?

So, we have to kyc ourselves, and for what? For the most part, we get full dox, higher fees and low volume. If you trade on volume and momentum like myself, it kills 90% of your best trades.

So, in the spirit of freedom, privacy, embracing the wild west, the U.S. citizen finds themselves competing with the big banks and bankers all over again, where all of the special incentives, OTC, zero fees are going to those with the most funds, while we struggle to stack them sats. I'd like to say it isn't fair, but that has little to do with it. It is my opinion, that in truth it's just bad business.

So, all of you exchange giants of the States, open your doors to us little guys. We're ready to plop down our massive... okay our hundreds of dollars with you and do business. We're not a hassle and we know a deal when we see one. Give us low fees and we'll bring you more volume. You already know who we are, in fact you have our mugshot, name, address, SS# and Govt. ID, so what more do you need? 

Gordon Freeman, here to represent. And until another day and another rant... Gordon Freeman out.