Institutional Money To Boost Bitcoin Market, But Not Too Soon


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Institutional Money To Boost Bitcoin Market, But Not Too Soon

Even with the latest rise of Bitcoin prices every institution has an opening or is preparing for its crypto-based products, a lot of investment strategy towards cryptocurrency is being cautiously viewed.

Wall Street prepares but still stays on sidelines when it comes to investing in Bitcoin

One of the key drivers of the recent uptrend in Bitcoin is a sudden inflow of funds. Not just in a spot or cash markets, Bitcoin (BTC) futures average daily volume (ADV) at the Chicago Mercantile Exchange (CME) also increased by 93 percent in the second quarter over the first quarter of 2018. The daily trading volume of digital assets and its futures has seen a consistent uptrend in the last couple of weeks.

Outside of existing market makers, if someone could bring this kind of volumes is institutional investors. But compared to the kind of volumes that Institutions are capable of bringing to the market, this volume could be signs that institutions are inching closer to bitcoin and other cryptocurrencies in the remaining months of 2018.

The increasing interest of institutions could dramatically alter the global significance of crypto assets by year-end. Goldman Sachs launched a cryptocurrency trading desk and Intercontinental Exchange Inc., (ICE) , the parent company of the New York Stock Exchange, plans to provide a cryptocurrency data feed in a partnership with Blockstream and publicly hinted at the possibility of launching a crypto futures desk of its own are signs that some institutions are just preparing of huge inflows that may be bound to come.

Also, read: Bitcoin Futures Expire Today, Are you Buying the Dip?

Bitcoin might still have to wait before actual money to come in

Currently what seems to be stopping the institutions from approaching the crypto markets is that there is still no Regulatory clarity, unaware of what should be reported that could be called as Institutional grade data and non-existence of Enterprise-ready infrastructure which could give comfort to institutional investors. The same can be “heard and felt” in statements of major leading investors who explicitly describe the problems or some just say it off saying that there is no interest.

Yossi Dayan, head of digital assets at wealth management firm Altshuler Shaham, observes that

“a lot of the weaker hands that bought into BTC earlier in the year have been taken out, which is allowing for some good price action. This can continue. There is also some excitement regarding a potential ETF approval from the SEC. It might be somewhat premature considering the cautious stance the SEC has taken so far regarding crypto. An approval carries significant implications and it’s not something the U.S. regulator is rushing into.”

However, while cryptocurrencies appear to be gearing up for another bull run, Eterbank.com, a provider of cryptocurrency point of sales for retail and other “real world” uses, has pointed out that mass adoption of cryptocurrency will be difficult until people can use it to buy ordinary goods like a cup of coffee.

The same kind of sentiment was heard in the chorus when Josh Bottomley, the Global Head of Digital at HSBC said in an interview with Forbes,

“We are cautious looking into this area,” referring to how HSBC plans to integrate cryptocurrency. He continued, “There’s a use case when you have a token or currency that’s actually useful for a particular purpose, and it serves that need.”

Earlier this month, even Larry Fink was in complete denial of the same when he said

“I don’t believe any client has sought out crypto exposure,” “I’ve not heard from one client who says, ‘I need to be in this.’”

While as the reports and comments arrive, there seem to be some preparatory movement in institutions but the initial denial of leading asset managers could be observed as a “silence before the storm”

Are institutions preparing themselves before they take a big leap to cryptos? Do let us know your views on the same.

Author: Nilesh Maurya
Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.
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Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.
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