Coinbase OTC Brokered Tesla’s Influential Bitcoin Purchase

Coinbase​, the most popular US platform to buy and sell cryptocurrencies, was the entity that brokered Tesla’s $1.5 billion bitcoin purchase earlier this month, the Block reports.

Until now, it has not been clear who facilitated the big deal, which further opened up the idea to a whole new class of mainstream corporates and institutional investors.

The electric vehicle maker’s crypto investment was bought in the first week of February, and was executed over the course of several days to limit market slippage, sources familiar with the deal revealed.

The deal was done via the exchange’s brokerage unit called Coinbase Prime and leveraged human effort and trading algorithms that sliced Tesla’s order. Cutting the order into much smaller orders placed across several liquidity pools helped minimize price impact.

Tesla, Inc., the world’s biggest producer of electric vehicles, with a market capitalization of $766 billion, has become a central talking point in the crypto industry since it decided to invest in bitcoin as a reserve asset, pouring in nearly 8% of its cash into the virtual currency. At the time, the move pushed up the price of Bitcoin by as much as 20% following Tesla’s announcement.

In a filing with the SEC, the company said it acquired the bitcoin for “more flexibility to further diversify and maximize returns on our cash.”

Coinbase’s agency OTC desk was also as the primary execution partner for MicroStrategy’s multi-billion purchase of Bitcoin throughout 2020. The unit acts as an agency and earns commission by executing client trades directly between two parties instead of on an exchange .

Coinbase Has $90 Billion in Platform Assets

Bitcoin’s rising mainstream acceptance has resulted in bringing the total number of accounts on Coinbase north of 43 million in over 100 countries. This milestone, which includes its retail and institutional clients, is up 8 million from the figure it revealed back in mid-2020.

Coinbase also revealed that it had an explosion of incoming capital in 2020. Its assets on the platform currently stand at $90 billion, highlighting a string of bullish events that have unleashed a wave of institutional adoption.

The San Francisco-based firm said in November that its custody service controls $20 billion worth of cryptocurrencies, $14 billion of which were accumulated in less than six months.

The widely followed startup rolled out its crypto over-the-counter trading desk in 2018, initially testing interest in the product from professional traders.

Source: Read Full Article