How Institutional Investors are Positioning Themselves in the Crypto sphere
Bitcoin hit an all-time colossal value of $19,800 in December 2017. With other altcoins proportionately following suit, the total market capitalization value went beyond $600 billion in that year. In 2018, the cryptocurrency capitalization value shrunk to less than a third in comparison to 2017.
Bitcoin’s price is based on supply and demand. If the US approves a Bitcoin ETF this year, the price could increase because of demand from institutional investors. The New York Stock Exchange, Goldman Sachs, Circle, and Fidelity have indicated that they would enter the crypto space once the regulatory regime in the US is better defined.
Most investors are now hopeful that the current bearish market has hit its lowest value, and the good tidings of 2017 are making a comeback. This optimism has further been fueled by the great interest that institutional investors are showing in an industry they were previously very skeptical of.
Cryptocurrencies have largely been associated with volatility, pitting them against traditional investment institutions. Goldman Sachs CEO reified this fact by noting that “something that moves up and down 20% in a day doesn’t feel like a store of value.”
His sentiments have been backed by many others in his position including Jamie Dimon, CEO JP Morgan Chase & Co who said that Bitcoin is a bubble with no happy ending. Investment industry god and chief Bitcoin bear Warren Buffet also likened Bitcoin to rat poison.
are the causes of this skepticism?
Old school investors are never at home with risk, nor do they chase a quick buck. Leery masters of the long game, they prefer stable long-term investments instead. This is why the dramatic volatile nature of cryptocurrencies puts them off. Add that to over-exaggerated connections of Bitcoin, and the dark web, lack of regulations and the turbulent liquidity problems.
But according to Bloomberg, institutional investors are slowly edging out high net worth individuals as cryptocurrency largest buyers in the $100,000 worth range. The $220 billion market has proven too attractive to ignore, and they are making large private transactions with crypto’s significant sellers. These sellers have started holding regular sales instead of market rally offloads signaling the end of the Wild West days of crypto.
Five institutional investors making pathways in the Crypto sphere
With a $7.2 trillion portfolio and 27 million customers, Fidelity Investments has made big waves in the crypto sphere with the launch of Fidelity Digital Asset Services, LLC. Its platform is designed to draw in institutional investors and other industry players who are seeking to partake a piece of the cake in the cryptocurrency market.
Fidelity is offering custodian
services and crypto trading on exchanges for its investors. They aim to help
their investors access digitally native assets, marking their mark as one of
Wall Street’s first companies to dip their toes in the digital assets storage
The implications of their move
can only signal greater things for investors. Additionally. their platform
offers a trustworthy investment vehicle for skittish investors. With their high
level of security, experience and service sophistication, their scalable
infrastructure will bring in more investors, albeit in the long haul.
on the heels of its rival in fund management, BlackRock
Inc, the world’s
largest asset management firm has the crypto sphere at its feet hoping that it
will make a big stride in blockchain technology and cryptocurrency trading. In
a bid to position itself, it has a working group looking into blockchain
its CEO Larry Fink is not making any promises yet, saying he does not see the
required demand as yet, there is hope in its early blockchain adoption. He said
that managing a $6.3 trillion portfolio in their investment would be a significant
endorsement for this challenger technology.
While this Wall Street banking Giant
has not opened shop for cryptocurrency products, possibly due to the current
bearish market, it has nevertheless made some waves for investing in BitGo
Holdings Inc. BitGo has plans
to develop a crypto
wallet worth $1 trillion,
and with a processing capability of $15 billion cryptocurrency transactions per
month, it actually owns 15% of all global Bitcoin transactions.
Goldman Sachs has also offered clearing services for certain Bitcoin futures. Investors hope that it will complete its plans to set up a trading desk that will also enable custodial services. The Giant company is positioning itself in the crypto sphere through evolution of unique services and critical market infrastructure.
Bakkt, a Company that runs on
Microsoft technology, and founded by Intercontinental Exchange NYSE’s parent company has a slew
of big-name investor institutions to back it up. With the backup of renowned
institutions such as Starbucks and BCG, it is entirely geared to attract into
the crypto sphere more institutional investments.
is building a futures` clearing and exchange house backed by a financial guarantee.
This game-changing entity will eventually feature Bitcoin to Fiat conversions and
serve the entire cryptocurrency supply chain.
The sixth largest bank by assets in the U.S, Morgan Stanley is in the process of building a platform that assists investors to trade Bitcoin. Its derivative product though in its infancy stage, will give its traders a “synthetic exposure” to Bitcoin’s performance.
The bank is not ready to trade cryptocurrency directly through its network but it is prepared to offer Bitcoin swaps as demand peaks. Its traders will have the choice to either go long or short on their price return swaps, and the bank will earn from the spread.
Many other titans like Citigroup, Coinbase and Circle, have also joined in the race to integrate cryptocurrency trading in the portfolios. Research from digital Assets Research shows that the cryptocurrency OTC market has been facilitating between $250 million to $30 billion trades per day as of early 2018, with the trades currently leveling at $15 billion per day. Such news gives hope to the crypto sphere that values are about to rise once more and the endorsements that these big wigs captivate will take trading further than has been possible before.
Featured image via BigStock.
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