Cryptocurrency options traders are moving into the proverbial shadows thanks to startup trade messaging platform Paradigm.
Launched in 2019, Paradigm has offered a platform for traders to trade in large size bilaterally and then settle those trades onto crypto options venues like CME Group and Deribit.
The firm's most recent platform update, dubbed Multi-dealer RFQ and Anonymous Trading, allows those participants to now trade with several counter-parties at once — and anonymously, to boot.
"The upgrade will reduce time spent to make a multi-dealer trade from minutes to seconds and make liquidity for large and multi-leg orders instant and 'on-demand,'" said CEO Anand Gomes.
The ability to price a trade across several counter-parties at once significantly improves pricing and lowers cost, while also allowing traders to engage in the same complex multi-leg order types that they would have access to in traditional options markets. The addition of the new feature has helped boost volumes going through Paradigm — the firm sees about $40 million in daily average trading volumes.
Paradigm's reported growth has occurred alongside the break-neck growth in bitcoin options. Open interest across the entire bitcoin options market on November 16 hit an all-time high of $3.8 billion, according to data collected by The Block.
Since the launch of the new feature last week, more than three-quarters of the firm's more than 300 trading firm clients have opted to trade anonymously with one another. The ability to trade anonymously through Paradigm allows a hedge fund or trading firm to put on a position without showing its hand and impacting the broader market and order books of underlying exchanges.
That could help bring more entrants into crypto options, says Gomes.
"It's already increased flow from our existing guys," he said. "And several clients who previously weren't trading on Paradigm because of the lack of anonymity have started to trade enthusiastically. The numbers speak for themselves."