The dramatic growth of Bitcoin[1] and the wider crypto-market has pushed the asset class to the forefront of the investment space. This has been the case, despite growing regulatory concerns, numerous FUDs, extended periods of consolidation, and diminishing market anticipation. Simply put, Bitcoin seems to be passing the test of time.
In light of the market’s evolution, however, frequently used market terms when used in the context of the crypto-market are often either misinterpreted or misrepresented. One such term is Dark Trading.
Dark trading or dark pools have existed in the traditional investing sphere for a long time. Dark Pools are essentially private exchanges that operate independently from public exchanges like the NYSE and the NASDAQ. However, the emergence of dark pools in the crypto-verse is a comparatively newer phenomenon with a lot of grey areas surrounding their existence.
This article will look at dark pools in the crypto-space, in-depth, and how they can affect Bitcoin and other cryptocurrencies over the long term.
So, how do crypto dark pools work?
Let’s clarify one thing first.
Dark pools aren’t associated with the darknet or with any shady methods of exchange. While the term may seem rather ambiguous, they are simply trading platforms for anonymously trading cryptocurrencies. In fact, exchanges like Kraken started offering dark pools for cryptocurrency trading back in 2016.
Now, Bitfinex offers similar services while Broker-dealer TradeZero launched a dark pool trading facility with Jered Kenna in 2016.
These liquidity pools are non-transparent. This is why they are referred to as ‘dark’ in order to describe their opaque nature. Large organizations or institutional investors can trade huge volumes of coins, anonymously and discreetly. An estimated 15% of all trading volume[2] in the American stock market takes place in dark
