Retail and Institutional Investors Cryptocurrency: Some Points of Differentiation

In its early years, the cryptocurrency industry was very much a retail phenomenon; traditional companies and entities did not take crypto as something serious or,  moreover, something worth investing in. The industry started to attract institutional interest after 2017, and more actively after the 2020s and the Bitcoin boom.

Today, more institutions are considering crypto as a worthy investment option, including hedge funds, investment banks, family firms, tech companies, etc. Tech companies such as MicroStragegy and Tesla have become the biggest BTC holders; JPMorgan Chase added crypto-friendly banking services and even launched its own crypto, JPM Coin. Payment processor PayPal has added crypto payment options to its system. This list could be endless. Let’s discuss what platforms companies use for institutional crypto trading and what the main differences are between retail and institutional trading.

What is an Institutional Crypto Exchange?

Large-volume trades require sufficient liquidity, protection, and advanced tools. These all are available on an institutional crypto trading platform. An example can be Binance or WhiteBIT exchanges. By registering a crypto institutional account, investors gain access to sophisticated tools and enhanced security for their assets. Those tools include:

  • Advanced order types
  • Direct market access
  • Algorithmic trading tools
  • Reporting and compliance
  • Tools for market analysis
  • Custory solutions.

Key Differences Between Retail and Institutional Crypto Investments

We’ve put these in the table below:

Feature Retail Institutional
Size of investments Retail traders’ volume is much lower than that of institutions Companies invest billions of dollars in crypto
Risks taken Retail traders risk with their own funds Institutions often act on behalf of their clients, so they take risks with other funds
Regulations and compliance Retail traders don’t have to adhere to such strict rules as institutions do. Institutions that own at least $100 million in assets under management must disclose their holdings to the US SEC, so they are under scrutiny
Impact on the market Retail traders don’t have a big impact on the market. Still, in some sense, every retail trader is a market maker to the extent of the volume it gives to the market by placing a trading order Institutions pour large amounts into trading, so it may have an impact on the market. They also can provide market-maker services, often unavailable to retail traders
Fees Regular fees Usually, lower fees come from partnerships with exchanges and market-making services

Table: The differences between retail and institutional trading


Of course, every single trade makes a difference on a particular crypto trading platform. However, institutional crypto traders have a much bigger impact on the market as they invest much larger amounts than retail traders. Therefore, institutions receive more advanced tools and opportunities, as well as higher risks on the flip side.

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