A small band of trading specialists are taking calls about $50 million bitcoin deals

The explosion and maturation of the cryptocurrency market has institutions pouring money into the space.
Firms such as DRW, a Chicago-based trader, and B2C2, a UK-based over-the-counter broker, are now regularly executing multi-million dollar trades.

Bitcoin has risen 600% since the beginning of the year, and now big firms are jumping on the cryptocurrency bandwagon. That's having an effect on the size of trades executed by bitcoin trading desks around the world, and driving up the demand for over-the-counter (OTC) brokers, who specialize in larger trades.

According to Maxime Boonen, a former interest rate swaps trader at Goldman Sachs who founded B2C2 in 2015, OTC bitcoin trade sizes have increased this year as interest in cryptocurrencies from institutional clients, such as asset managers, has buoyed. As such, larger million-dollar trades are more common at B2C2 than they were when the company was founded, according to Boonen.

It's a similar story at Cumberland MiningDRW regularly facilitates bitcoin trades in the $1 to $5 million range with trades in the $20 to $50 range being viewed as the "gold standard" ceiling.

"We are long bitcoin with our average transaction well north of $100,000," Bobby Cho, the head of OTC trading at Cumberland, said.

The main driver for this newfound interest, according to Boonen, is straightforward.

"It's a feel good story," he said. "Bitcoin is always going up and institutions are being asked by their clients to get in."

Such newcomers see the explosive growth of the cryptocurrency market, which has grown from $17 billion at the beginning of the year to $200 billion, as an attractive alternative to the low-yield environment on Wall Street.

According to Lex Sokolin, a partner at Autonomous NEXT, a fintech analytics provider, companies looking to liquidate the millions of dollars raised from initial coin offerings, a red-hot cryptocurrency based fundraising method, are also bringing big trades to OTC desks.

ICOs allow companies to raise ethereum, another cryptocurrency, by issuing their own cryptocurrency to participants or investors. In some cases, companies have raised hundreds of millions of dollars.

"If they are looking to liquidate some of that ethereum into cash to run their business, then they're going to go to an OTC," Sokolin.

Trevor Koverko, the CEO of Polymath, a cryptocurrency company, for instance, told Business Insider his company liquidated some of the ethereum it raised from its ICO into cash via an OTC.

Boonen said the firm has ICO-funded companies coming to them "all the time." But they are very conservative about the ICO-funded companies for which they provide services.

This is just the first wave

The market, according to Boonen, is currently witnessing the first wave of institutions entering the fray.

"This year we've seen more nimble asset managers and brokers who deal with retail come to us," he said. "That's where it starts."

The next wave will come as the infrastructure around bitcoin continues to develop with new products such as futures, which two exchange groups have said they were preparing to launch this year, and an exchange-traded fund. An ETF would allow retail investors to more easily invest in crypto.

Cumberland's Cho sees an ETF on the horizon over the next 12-months.