BitGo partners with Susquehanna Crypto: Opening OTC access for prediction markets and a new wave of institutionalization

The prediction market sector is entering a transformation phase as major financial institutions begin to participate more deeply. One notable signal is the potential partnership between BitGo and Susquehanna International Group (SIG) to provide OTC trading for prediction markets.

If confirmed, this could be a significant step forward, allowing institutional investors to access prediction markets without having to sell their existing crypto assets.

Key Takeaways

• BitGo may provide OTC access for prediction markets through Susquehanna
• Investors could use crypto as collateral
• No need to sell Bitcoin or stablecoins
• Targeting hedge funds, family offices, and HNWIs
• A strong signal that prediction markets are becoming institutionalized

BitGo Prime and its role in crypto financial infrastructure

What is BitGo Prime?

BitGo has long been known as one of the leading crypto custody providers for institutions. However, its ecosystem has expanded far beyond simple storage with BitGo Prime.

BitGo Prime functions similarly to a prime brokerage in traditional finance, offering an integrated suite of services for professional investors:

1. Custody (asset storage)

• Secure storage of crypto assets with institutional-grade security
• Uses multi-signature and cold storage
• Designed for large asset managers

This is the foundation that:

• Protects assets
• Builds trust for institutional participation

2. OTC Trading (off-exchange trading)

• Enables large trades without impacting market prices
• Connects with market makers and liquidity providers

Benefits:

• Reduces slippage
• Optimizes execution for large orders

3. Lending & Collateral

• Allows crypto to be used as collateral
• Access liquidity without selling assets

This is crucial for institutions:

• Maintain long-term positions
• Improve capital efficiency

Why BitGo Prime is “financial infrastructure,” not just a service

What sets BitGo apart:

It doesn’t offer a single product—it provides a full ecosystem, including:

• Asset custody
• Trading execution
• Liquidity management
• Risk management

These are the core components of true financial infrastructure in crypto.

Why BitGo fits prediction markets

Current limitations of prediction markets

Platforms like:

• Polymarket
• Kalshi

have popularized prediction markets but still face key issues:

1. Mostly retail-focused

• Designed for individual users
• Lack institutional-grade tools

2. Limited liquidity for large orders

• Thin order books
• Large trades can cause:
  • Slippage
  • High volatility

3. Lack of professional infrastructure

• No institutional-grade custody
• No integrated prime brokerage
• Difficult to deploy complex strategies

How BitGo solves these problems

1. Large-scale execution

With OTC trading:

• BitGo can execute large orders off-exchange
• Avoid market impact

Critical for:

• Hedge funds
• Market makers

2. Institutional-grade custody

• Assets remain within secure custody systems
• Reduces risks such as:
  • Hacks
  • Smart contract failures
  • Exchange risks

3. Access to deep liquidity

Through partners like Susquehanna International Group:

BitGo can:

• Provide better pricing
• Increase market depth
• Support large-scale trades

Susquehanna Crypto: The “Liquidity Engine” Behind the Scenes

Who is Susquehanna International Group (SIG)?

Susquehanna International Group (SIG) is one of the largest and most discreet trading firms in the world, with decades of experience in traditional financial markets.

SIG stands out in three core areas:

1. Options trading

• One of the leading market makers in the global options market
• Capable of:
  • Pricing complex assets
  • Managing risk in real time

This is especially relevant for prediction markets, which are essentially about pricing probabilities.

2. Market making

SIG specializes in:

• Providing continuous liquidity
• Quoting both bid (buy) and ask (sell) prices

Role:

• Ensures there’s always a counterparty
• Reduces spreads
• Improves price efficiency

3. Arbitrage

• Exploits price differences across markets
• Keeps asset prices aligned with fair value

This helps:

• Increase market efficiency
• Reduce price distortions

Role of Susquehanna Crypto in the ecosystem

The crypto arm of SIG brings TradFi expertise into digital assets.

If the partnership with BitGo materializes, roles would be clearly divided:

1. SIG provides liquidity & pricing

Liquidity

• Ready to buy and sell in large volumes
• Ensures:
  • Constant trading availability
  • No “stuck orders”

Pricing

• Uses advanced pricing models
• Reflects:
  • True event probabilities
  • Market information

In prediction markets:

• Price ≈ probability
• SIG helps make pricing more accurate and less prone to manipulation

2. BitGo provides infrastructure & custody

Meanwhile, BitGo handles:

• Asset custody
• Collateral management
• Institutional client access

This creates a system that is:

• Secure
• Compliant
• Institutional-grade

What does this combination create?

1. A professional OTC market

By combining:

• SIG → liquidity + pricing
• BitGo → infrastructure + custody

The result:

• Deep liquidity
• Stable pricing
• High-quality execution

2. Solving key problems of prediction markets

Current challenges:

• Thin liquidity
• Price manipulation risks
• Difficulty handling large orders

SIG can:

• Fill liquidity gaps
• Stabilize prices
• Help the market mature

3. Ideal for large-scale trading

For institutions:

• Orders can be worth millions (or more)

OTC + market makers like SIG enable:

• Reduced slippage
• Strategy confidentiality
• Optimized execution

How does OTC work for prediction markets?

How is it different from retail trading?

On popular prediction market platforms like Polymarket:

• Users trade directly on a public order book
• Prices are formed by real-time supply and demand
• Best suited for:
  • Retail investors
  • Small to medium-sized trades

OTC model: off-exchange trading

In contrast, OTC (Over-The-Counter) works very differently:

• Trades happen off-exchange
• Orders are not placed on a public order book
• Instead:
  • Investors negotiate directly with liquidity providers
  • Or go through intermediaries like BitGo

How OTC works in prediction markets

Basic flow:

1. An investor wants exposure to an event (e.g., elections, macro trends)
2. They send an RFQ (Request for Quote)
3. A market maker (e.g., Susquehanna International Group) provides a price
4. Both parties agree and execute the trade

No need to:

• Place orders publicly
• Wait for matching

Benefits of OTC

1. No slippage

In order books:

• Large orders consume liquidity
• Prices move significantly

In OTC:

• Price is agreed upfront
• Not affected by market depth

Critical for:

• Multi-million dollar trades

2. Suitable for large transactions

OTC allows:

• Executing large trades without:
  • Moving the market
  • Revealing strategy

This is standard in:

• Forex
• Commodities
• Derivatives

3. Higher privacy

• Trades are not publicly visible
• No bot tracking
• Reduced risk of front-running

Important for:

• Hedge funds
• Large institutions

Using crypto as collateral: a major breakthrough

No need to sell assets

A key innovation:

Investors don’t need to sell crypto to participate

They can use:

• Bitcoin
• Stablecoins (USDT, USDC)
• Other crypto assets

As collateral

How it works

1. Assets are held in custody (e.g., BitGo)
2. Based on asset value → a trading limit is granted
3. The investor uses that limit to take positions

The original assets:

• Remain owned by the investor
• Are not sold

Why this matters

1. Avoiding tax events

Selling assets may trigger:

• Capital gains tax
• Reporting obligations

Using collateral:

• No sale → no immediate tax

2. Maintaining long-term exposure

Investors:

• Keep exposure to Bitcoin
• Don’t exit their position

Important if:

• They believe in long-term BTC growth

3. Capital efficiency

One asset can:

• Serve as collateral
• Maintain investment exposure

This reflects:

• “One unit of capital, multiple uses”

Common in:

• Hedge funds
• Trading desks

Target clients

This model is not designed for retail users, but for institutions and large investors:

1. Hedge funds

Characteristics:

• Strategy-driven trading
• Arbitrage opportunities

Use cases:

• Betting on events
• Combining with:
  • Derivatives
  • Macro strategies

OTC provides:

• Better execution
• Strategy confidentiality

2. Family offices

Characteristics:

• Manage wealth for affluent families
• Seek new investment channels

Prediction markets offer:

• Exposure to:
  • Politics
  • Economics
  • Geopolitics

OTC + custody ensures:

• Security
• Professional standards

3. HNWIs (High Net Worth Individuals)

Characteristics:

• Large personal wealth
• Demand premium services

They need:

• Privacy
• Deep liquidity
• Customized solutions

OTC is ideal because:

• Trades are not public
• Deals can be tailored

Big Trend: Prediction Markets Are Becoming “Institutionalized”

This development reflects a broader shift in the industry:

1. From retail → institutional

• Initially: dominated by individual users
• Now: investment funds and institutions are entering

2. From DeFi → hybrid finance

A combination of:

• On-chain platforms (e.g., Polymarket)
• Off-chain services (OTC, custody via BitGo)

3. Converging toward traditional finance standards

• Stronger compliance frameworks
• Professional liquidity provision (e.g., Susquehanna International Group)
• More robust infrastructure

FAQ – Frequently Asked Questions

What is OTC? → A direct trade between two parties without going through a public exchange.

Why don’t institutions use Polymarket directly? → Limitations in liquidity, compliance, and handling large order sizes.

Is using BTC as collateral risky? → Yes. If the price of Bitcoin drops sharply, positions may be liquidated.

Disclaimer:The information provided here is for informational purposes only and should not be considered financial, investment, legal, or professional advice. Always conduct your own research, consider your financial situation, and, if necessary, consult with a licensed professional before making any decisions.