Cryptocurrency trading volumes have dropped sharply
There have been a number of different stories that have arisen in the last few months regarding the increase in institutional penetration into the crypto market. As of last month in early October, there was a Bloomberg report that cited that Boby Cho, which is the global head of trading at Cumberland.
According to Bobby Cho, he stated to Bloomberg that bigger hedge funds are now replacing the high-net individuals in the crypto industry. Morgan Stanley conducted a research that was centered around observations on the growing institutions willing to participate in the crypto space. Bitcoin enthusiasts like Mike Novogratz thinks that there will be an inrush of institutional money that will be flowing into the cryptocurrency market by mid-2019.
Unclear regulations have been stopping some institutional players from entering the developing world of cryptocurrency and assets. However, Bloomberg thinks that there is another narrative behind these stories.
Regulations in a free market and the hurdles major institutions will face
According to an article from Bloomberg:
“The biggest roadblock to Wall Street behemoths rolling out cryptocurrency businesses could come from their own clients, rather than from regulators.”
The Revolut Ltd founder, Nikolay Storonsky is currently valued at over $1 Billion which allows retail investors to speculate on the cryptocurrency market alongside coins like Bitcoin and Ether. At the Web Summit in 2018 in Lisbon, there was a speech given by Storonsky which stated that Wall Street institutional giants have little interest in cryptocurrencies. Because of this things could become difficult for big financial institutions like ICE and Fidelity, who are currently targeting institutional players through the application of derivative products that are tied to digital assets.
As stated by Storonsky:
“Unless these big institutional investors and hedge funds move heavily into the crypto world I just don’t think Banks will move because they simply try to make money from their clients.”
This may lead to claims of retail investors thinking that there could be a crash down of thousands of retail investors coming to the crypto space. However, according to market research, the cryptocurrency market is now in its institutional entry phase as many people are waiting for some seamless developments that are happening. Stornsky’s views are quite similar to BlackRock CEO Larry Fink, as he stated that his company’s clients have no interest in cryptocurrencies.
In an interview coming from CNBC last week with Fink, he mentioned that his company will not be launching an ETF product until the market is legitimate. However, he noted that BlackRock still has its doors open for participation in the crypto investment market together with associated products.
Institutions are preparing for another crypto market run
Early financial institutions that have been in the cryptocurrency market for some time now, were previously quite hostile towards cryptocurrencies but have since warmed up its implementations. According to reports, Morgan Stanley is working on swaps for Bitcoin futures, which will be tradeable after official institutional demand. Other banking institutions like Citi Group and Goldman Sachs have also been working on cryptocurrency products and services.
This year has not been going too well for the cryptocurrency market according to Storonsky, however, the Revolut’s Bitcoin trading volumes are only as low as 20% from what they were back in December of 2017. The cryptocurrency market will have to show some improvement in 2019, with a lot of projects ready to launch and Wall Street’s entry into the crypto space.
What are your opinions about these developments taking place in the crypto industry? Please feel free to leave your comments down below.