August 20, 2020

How digital asset exchanges can meet institutional investors’ need for speed

By admin

The investors in the market understand the time value of money and hence look for the option where they can have quick trade. Therefore nowadays, they have turned to digital exchanges for ease of investing and trading. This can also prove as a good option for virtual currency lovers.

The growing competition among digital asset exchanges has meant that there will be less margins for every player in the market. Not only that, they are also forced to work on lower deposit and withdrawal thresholds to attract small and new investors. With interest growing both from the side of retail as well as institutional investors, these exchanges have to adapt to vast changes, including regulatory norms from different regions.

10000 exchanges across the world

You will be surprised to know that there are as many as 10000 digital asset exchanges around the world, and the number is all set to increase in the near future.  This is not an encouraging fact as it leads to various problems both for users and service providers. New investors will be confused about which exchange to choose from as they do not have a good understanding about various rates and features offered by these exchanges. On the other hand, exchanges will have to play with very less margins to sustain in this market.

Challenges of digital asset exchanges

One of the biggest challenges faced by digital asset exchanges is the price disparity that arises due to local regulations. As they have to match the price in the market, they will have to pair the cryptocurrencies with local fiat currencies and provide good liquidity options for traders. This becomes easy when the liquidity is very good in the market. However, as the market is still in the early stages, there is not enough liquidity to get a uniform price across the market. Due to this reason, different exchanges are offering different prices, and it is not uniform across different regions.

Institutional boom to digital asset exchanges

In the near future, the participation of institutional traders will provide the next boom to these starved exchanges. If the participation by these players increases in the future, it can lead to a good increase in trading volumes that will help the exchanges to build better infrastructure where they can process transactions at a good speed. The exchanges are in the process of developing fresh blockchain technology applications that can provide reliable and efficient service for traders.