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As the crypto market grows in India and large cryptocurrency exchanges accumulate deep liquidity, brokerage firms are ready to enter into the market. This will set the stage for the next phase of industry growth. Brokerage system has long played a crucial role in the stock market where whether it’s providing investment advice to the investors or solely focusing on buy and sell orders, they have played a crucial role in the meeting of traders, investors, buyers, and sellers. As the large exchange trading platforms provide essential investment services to the cryptocurrency investor, the industry seems to allow the entering of large brokerage firms into the market.
A shallow inroad
Though the brokerage firms have commanding stature in the traditional market, they have made relatively shallow penetration into the cryptocurrency market. And hen talking about the cryptocurrency market, the large part is being dominated by cryptocurrency exchanges where the buyer and the seller meet to buy and sell cryptocurrencies. Though most cryptocurrency investors and traders purchase cryptocurrency from an exchange few traditional brokerage firms offer the users a way to purchase cryptocurrencies.
There are many virtual asset exchanges in competition within the cryptocurrency market that is similar to the number of brokerage firms competing in the traditional markets. Deeper liquidity ensures greater centralization in the cryptocurrency market as the market has its own pattern to narrow down its selection over time. There is a challenge of fragmented liquidity in the cryptocurrency market when executing large orders. The brokerage services solve this kind of problem and provide for capital sufficiency improving the connection between different platforms.
The market seemingly moving towards consolidation and this drives continuous demand and liquidity that would make cryptocurrency investment more attractive to the traditional brokerage firms.
The convergence of traditional and cryptocurrency market
There is a rapid expansion of cryptocurrency derivatives which is a source of attraction for institutional investors. There are greater meeting points between the traditional and cryptocurrency financial market players due to the trading of cryptocurrencies on a wider scale. There is now a greater similarity between traditional markets and cryptocurrency markets due to the adoption of cryptocurrency on a large scale. Now that the cryptocurrency market has gained that much depth in trading and liquidity, the traditional traders and brokerage firms are eyeing the market to enter and set the next phase of market growth.
One of the advantages of crypto brokers is that they can provide access to multiple exchanges ensuring the high liquidity scenario for their customers. They can also provide advanced trading tools to data analytics to the customers as the “one-stop-shop” that could lead to the maximization of their trading performance.
Brokers who enter the crypto market are also competing with each other to attract mainstream retail and institutional investors by offering competitive trading services. This could lead to the bridging of the gap between traditional and cryptocurrency markets. The crypto brokers will lead the development of the crypto market by offering bespoke services to mainstream investors where they could leverage the expertise of established trading exchange and their market liquidity and trading depth. The capital that will be brought by crypto brokers could also play a crucial role in furthering the trading exchange liquidity.
So, from the above discussion, it is quite clear that the future looks bright for the traditional brokers to enter the Indian market buzzing with their liquidity and lead the next phase of the evolution of the cryptocurrency market just like what they have done with the traditional finance market.
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Are Brokers Ready to Rule Crypto in India? was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.
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