In the early years, digital assets used to be popular among tech-savvy people, retail traders, and enthusiasts. The first crypto institutional investors emerged after the first significant surge in Bitcoin’s price (in 2021). Since then, crypto ceased to be a sector for a narrow circle of tech specialists and fans – today, it is the domain of technological companies, financial entities, family firms, and banks.

Here is how we divide crypto investors:

  1. Retail investors
  2. Institutional investors
  3. High-frequency traders (HFT).

In this article, we will provide brief characteristics of these sorts of traders.

What is Retail Traders?

Retail traders are non-professional traders who trade in their spare time and use their own funds usually in small amounts. They trade because enjoy trading, but it is not their full-time occupation. The trading volume of retail traders is small and does not have any impact on the market generally. Retail traders are sensitive to every market swing. They are subject to behavioral biases (like FOMO) and may act impulsive.

High-Frequency Trading in Crypto

Unlike retail traders, HFTs perform a large number of trades in a matter of seconds. HFTs use complex algorithms and math programs to analyze the market and conduct a huge number of trades in the shortest timeframe. High speed brings high profit-making potential.

On the flip side, they bring a lot of benefits to a trading platform where they perform trades. With their frequent trades, they add a significant amount of liquidity, so they can act as market-makers on an institutional cryptocurrency platform.

How Institutional Traders Trade

They are organizations, funds, and companies that act on behalf of their clients and use their money. Institutions in crypto are also called “whales”. They operate with large amounts and create large trading volumes, which may impact the whole market. To cut their impact on the market, whales use over-the-counter platforms (large-scale traders are executed directly between buyers and sellers, off the regular exchange order books).

How to learn institutional trading? The process requires an in-depth understanding of the market and trading tools, sophisticated strategies, and risk management mechanisms.

Financial entities and banks may also participate in a crypto market-making program, as they pour billions into crypto trading and impact liquidity.

Wrapping Up

The crypto market attracts all types of traders and offers earning opportunities for anyone – whether you are a non-professional retail trader, an institution, or an HFT.


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