The company reports a significant expansion of its user base, in particular institutional investors
Galaxy Digital’s over-the-counter trading desk recorded record volumes in Q3 2020, signaling once again that the institutional focus on digital assets is growing.
The company’s third-quarter earnings report shows a 75% increase in trading volumes compared to the previous year, at around $1.4 billion. The growth was attributed to the expansion in the number of users, the launch of an electronic trading platform and the continued expansion of Galaxy Digital’s new business, crypto derivatives.
Assets under management amounted to $407.4 million, including $82.4 million in Bitcoin funds (BTC) and indexed in addition to $325 million in the VC Galaxy EOS fund. The latter is a partnership with the commercial bank blockchain Block.one, founder of EOS.
The Bitcoins held by Galaxy grew 17.3% in the third quarter and its broadly capitalised Crypto Index Fund offered returns of 32.3%.
Mike Novogratz, founder and CEO of Galaxy Digital, told Cointelegraph:
„This year we have seen a significant increase in institutional interest in the digital asset industry as investors seek hedging against market volatility and new areas to find attractive returns in a macro environment of very low rates. Looking ahead to 2021, we expect the adoption of digital assets such as Bitcoin and Ethereum to continue as more and more traditional investors choose this asset class to diversify their portfolios and have an alternative asset shelter to gold.
Tim Plakas, head of sales at Galaxy Digital Trading, pointed out:
„Trading on Galaxy has seen significant growth over the past year as our user base has expanded significantly in terms of size following the entry of more traditional funds into the crypto world […] Over the next 6-12 months, I expect these trends to continue.
Plakas indicated the acquisition of BlueFire, a trading company specialising in digital assets, as a major source of competitive advantage in the third quarter.
Galaxy Digital was founded in 2018 by billionaire Mike Novogratz in an effort to bring more institutional investors into digital assets. Novogratz said in an official press release on 13 November that his company is preparing for „the wave of institutional adoption of digital assets and blockchain solutions by investors, companies and governments.
While the 2017 bull run was largely driven by the Fear of Missing Out (FOMO) of retail investors, the hype surrounding Bitcoin in 2020 is largely linked to institutional adoption.
Some data indicate that institutional investors are rushing to enter the Bitcoin world in even greater numbers in the fourth quarter: Grayscale’s Bitcoin Trust recorded a record capital inflow in early November, and is on track to reach BTC 500,000 by the end of 2020. This would amount to around 2.7% of the crypto’s current supply.
Investors such as Paul Tudor Jones and Stanley Druckenmiller also own Bitcoin; both have spoken specifically about the growth potential of crypto currency in the current macro environment.
The price of Bitcoin has peaked at nearly $16,500 in the last 24 hours, according to TradingView data. At the time of writing, BTC is trading for $15,800.