“’It was the night before Christmas, and the whole house was motionless except for the biggest trading shop in the cryptocurrency market.”
Even on rare occasions when global capital markets are closed, such as during Christmas and New Year’s Eve, cryptocurrency brokerages, market makers and OTC trading operations remain open to take orders and provide liquidity.
This characteristic occurs because cryptocurrency markets typically operate 24/7. Digital assets are continuously exchanged through a network of public ledgers, cryptocurrency brokerages, exchanges, and trading institutions that collectively form the industry’s emerging capital market.
In particular, liquidity providers such as Wintermute and GSR will need to maintain some level of presence over Christmas, acting as liquidity providers and managing over-the-counter trading desks. Market makers act as intermediaries, providing bid and ask price quotes to ensure there is sufficient liquidity for traders to enter and exit a particular asset. Meanwhile, the OTC desk facilitates significant over-the-counter transactions to meet the needs of large clients.
“The cryptocurrency market never sleeps, and neither does Wintermute’s OTC desk,” said Evgeny Gaevoy, co-founder of Wintermute. “We are in a position to serve our counterparts in all regions, recognizing that in some regions, including parts of Asia, Christmas is observed as a regular working day.”
It’s a similar story at GSR, which is “always staffed.”
volatility of volatility
As for market dynamics during the holiday season, GSR’s Richard Rosenblum said that could vary, noting that “the base case is to expect lower volatility.”
“However, if a VOL catalyst comes into play, we could expect a much larger move than usual as liquidity conditions become more challenging.”
As a result, holidays such as Christmas typically have higher volatility.
Rosenblum added that portfolios exposed to derivatives require constant monitoring, which requires keeping an eye on the screen during the sleepier period between Christmas and New Year.
“Even if client activity is low, holding a portfolio that includes options and derivatives requires additional risk management and maintenance when markets move.”
Regarding the number of tokens traded, Wintermute’s Gaevoy said that while cryptocurrency-based counterparties trade during the holiday period, most TradFis close their terminals and trading stations.
“Historically, we have seen consistent activity levels throughout the holiday season, with a slight decrease in activity on Christmas Day,” he said. “As a source of liquidity for hundreds of tokens, we trade a wide range of assets throughout the year, including Christmas, but the number of unique assets traded is moderately low compared to other days in December.”
“We’re getting a lot of onboarding requests,” he said. “This is often driven by strategic considerations, such as year-end taxes, for operational needs such as booking transactions or settling invoices before the end of the year.”
Disclaimer: Evgeny Gaevoy, founder and CEO of Wintermute, previously served on The Block’s Board of Directors from April 2023 to early November 2023 and remains a minority shareholder.
Disclaimer: The Block is an independent media outlet delivering news, research and data. As of November 2023, Foresight Ventures is a majority investor in The Block. Foresight Ventures invests in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is an anchor LP of Foresight Ventures. The Block continues to operate independently to provide objective, impactful and timely information about the cryptocurrency industry. Below are our current financial disclosures.
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