Cryptocurrency has grown massively with time since 2017. Currently, it has an enormous market cap amounting to over $120 billion. This is a clear indication that the industry is here to stay. So far, Cryptocurrency has had numerous opportunities that have made people want to get into the cryptocurrency trading with desire. These opportunities include ICOs, investing, and leveraged trading among others. Adding an influence to this trading can be a big advantage to the Forex brokers. This is because; it will enable easy engagements of the client base. A new trading volume can, therefore, be generated.
This series will look into the aspects of liquidity solutions for brokers who want to offer crypto trading.
How LPs Can Offer Crypto Liquidity
In this industry, there are numerous ways brokers can get Cryptocurrency liquidity. These methods are divided into three main ways. A detailed liquidity function is explained in this site http://www.global-liquidity.com/.
Market Making Cryptocurrency LP
At this point, brokers opt to work with a market maker Cryptocurrency LP. Here, the LP operates as a market maker of a CFD. In this case, they are able to run a book for cross rate among the Bitcoin including the US dollar. What happens here is that the LP accumulates the risk of any net position directly with the crypto exchange. Such crypto exchanges include Kraken amongst others. Vast capital is required, in this case, so as the process can complete.
STP To Exchange
A Cryptocurrency with an STP model to exchanges is mostly used by the brokers. An LP represents a fellow broker who is set to connect and send the entire trades to a combined exchange or a collection of exchanges. In case there is a connection between a broker LP and the alleged crypto exchanges, the outcome is usually impressive. Hence, there can be a makeup for the broker’s clients in the exchanges. As a result, a broker has a chance to provide his clients with the cryptocurrencies.
Direct Cryptocurrency Exchange
With this, there is a direct connection between the brokers and the clients. In the process, trades are sent straight from the broker to their clients. All these three LPs are unique and each has their own qualities. As it is ruled, brokers are free to choose either a single or two of the cryptocurrency liquidity methods. If a broker goes straight to an exchange, it can be difficult as opposed to, him going for the multiple STP LPs. However, a broker can receive a higher leverage if he or she goes to market maker LP.
How the Cryptocurrency Products Operate
FIX API is the suitable ways a broker can easily connect to the crypto LPs. As opposed to the exchanges, they can experience easy incorporation with the LPs. LP integrations with famous connectivity providers enable the easy offering of Cryptocurrency to the brokers. This occurs exactly on a broker MetaTrader platforms. In turn, clients are highly impressed. A broker is open to trading numerous coins such as Dax and USD, including additional pairs such as BTC/USD among others.
Lastly, it is inconceivable how the future can be without the cryptocurrency trading. This is because the tradable Cryptocurrency can be a form of numerous factors such as payments, investments, and hedging product. Cryptocurrency is an excellent market share booster if added to an instrument list. With the LPs, brokers are, therefore, able to accumulate extra live accounts.