Bitcoin pioneer Jered Kenna has teamed up with online broker dealer TradeZero to create the world’s first dark pool exchange for Bitcoin and hopefully other digital currencies. Dark pools are the name given to private exchanges or forums for trading securities, which facilitate very large orders without impacting the market and creating adverse price movements.
The Bitcoin market is less liquid than traditional FX therefore more volatile.
Dark pool trading in Bitcoin would be useful to mainstream investors who may want to make large trades in Bitcoin, or use it as a currency hedge without alerting the market to their positions.
Kenna, who launched the first US Bitcoin exchange in 2011, commented:
If a significant holder were to decide they wanted to liquidate their Bitcoin completely and dump it on an exchange all at once then the price could drop quite a bit. Similarly, if another individual places a massive buy order the price would likely rise.
Often, there is a relatively large amount of bids and asks near spot, but we’ve also seen times where liquidity is incredibly thin and small trades are capable of moving the market.
TradeZero has a minimum initial deposit of $10,000 or equivalent. If you’re trading above that amount you will likely save on slippage and benefit from the direct relationship with an account executive.”
Kenna also said that he has always seen security as the number one priority:
Since 2009 I haven’t lost a single Bitcoin to hacking or theft. Bitcoin isn’t as forgiving with mistakes as traditional banking, and extra precautions need to be taken.
At TradeZero, if something beyond the preset limits occurs, we will contact you first to verify. Reaching out over the phone to verify that you actually do want to suddenly transfer your entire balance is a slight inconvenience that is incredibly reassuring,” said Kenna.