Tag: Wall St.

Institutional Adoption of Cryptocurrency: The Next Big Wave

On By mehranmuslimiblogIn UncategorizedLeave a comment

The world of cryptocurrency has come a long way since the inception of Bitcoin. What was once considered a fringe movement for tech enthusiasts and cypherpunks has now entered the mainstream. The most recent crypto ownership survey by Finbold reveals that 10.2% of the global internet-using population owns some form of cryptocurrency. While retail adoption is noteworthy, what’s even more intriguing is the rising interest from institutions, particularly in the realm of Web3 and digital assets. In this article, we’ll explore the institutional adoption of cryptocurrencies, including trends, challenges, and what the future may hold.

Institutional Interest in Cryptocurrency

The rise of Web3, characterized by decentralization, privacy, and blockchain technology, has piqued the interest of institutional players, including Fortune 500 companies. According to a report by The Block, 52% of Fortune 500 companies have explored Web3 initiatives. While the “institutions are coming” narrative has been circulating for years, recent developments suggest a more tangible shift.

Bitcoin ETFs: A Game Changer?

One of the most optimistic developments is the filing of a Bitcoin ETF by BlackRock, a leading global investment manager. Despite previous rejections by the SEC, Bloomberg analysts predict a 65% chance of approval for this ETF. This application marks a significant step toward bridging the gap between traditional finance and the crypto space. A successful Bitcoin ETF could open the floodgates for institutional capital.

Crypto Assets Under Management (AUM) on the Rise

Cryptocurrencies are no longer just a curiosity; they are viewed as a legitimate asset class. Digital asset management review by CCData indicates that the total AUM for digital asset investment products reached $33.7 billion in July 2023, up from $22 billion a year ago. This increase is impressive, considering the challenges the crypto market faced, including the Terra collapse.

Bitcoin-based products dominate the institutional space, accounting for 71% of the market share. Ethereum-based products come second, constituting 22% of the market.

U.S. Dominance in AUM, Fueled by Grayscale

The U.S. has yet to approve a Bitcoin ETF, but institutional investors are showing a significant appetite for Bitcoin and Ethereum-based products. Over 70% of the capital in the U.S. flows through Grayscale, a crypto asset manager offering exposure to Bitcoin through the Grayscale Bitcoin Trust (GBTC). As of July 2023, GBTC’s AUM stood at $18.6 billion.

The recent narrowing of the GBTC discount, influenced by ETF applications, suggests growing institutional demand. When the discount narrows, it indicates increasing demand for the GBTC trust, indicating institutional accumulation.

Hedge Funds: Navigating Risk and Reward

Hedge funds, which experienced a challenging year in the crypto market in 2022, are cautiously optimistic about 2023. While the number of hedge funds investing in crypto assets dropped from 37% to 29%, 93% of them expect higher crypto market valuations in 2023 compared to the previous year. Hedge funds are also diversifying their investments beyond Bitcoin, exploring niche products and altcoins.

DeFi and the Gradual Shift

Decentralized Finance (DeFi) has gained traction, with traditional institutions like JPMorgan conducting DeFi transactions on public blockchains. The number of hedge funds using decentralized exchanges (DEXs) has been steadily increasing, with Uniswap, dydx, Curve, Sushiswap, and Pancakeswap among the top choices.

Family Offices: Growing Interest

Family offices are showing increased interest in digital assets, with 56% of them already investing in cryptocurrencies. While they currently allocate a small percentage of their wealth to digital assets, over 35% plan to increase their exposure in the future.

Bitcoin in the Boardroom

Publicly traded companies have also entered the crypto arena, with firms like Microstrategy, Tesla, and Coinbase investing in Bitcoin. Microstrategy, in particular, holds a substantial amount of Bitcoin, with its CEO, Michael Saylor, being a prominent Bitcoin advocate.

NFT Collections: Enhancing Digital Presence

NFTs are not only about art and collectibles; they offer a new way for institutions to engage with the digital realm. Nike, for instance, has partnered with EA Sports to integrate NFT-designed apparel into video games. Fortune 100 companies have generated $1.6 billion in secondary sales from digital collections.

The Awaited Bitcoin ETF

The question of whether the U.S. SEC will approve a Bitcoin ETF remains paramount. BlackRock’s application has sparked optimism, but past rejections cast a shadow of uncertainty. However, if approved, the ETF could significantly impact the crypto market, given BlackRock’s $9 trillion in AUM.

Major Hurdles in Institutional Adoption

Two major hurdles remain for institutional adoption: regulation and crypto custody. Regulatory uncertainty continues to challenge the industry, with evolving compliance costs. Custody remains a critical concern, as recent hacks highlight the importance of secure storage solutions.

Institutional adoption of cryptocurrencies is still in its early stages, with many opportunities and challenges ahead. As the regulatory landscape evolves and security measures strengthen, the institutional presence in the crypto space is expected to expand. The trends discussed in this article offer a glimpse into the future of finance, where traditional institutions and digital assets coexist and collaborate.

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Winklevoss twins tell Wall St to wake up

On By mehranmuslimiblogIn Bitcoin, cryptoLeave a comment

Winklevoss is a big name in the crypto world. The twins, who were Facebook co-founders, have been advocating for cryptocurrency for many years now, and have built up a considerable bitcoin holding, as well as founding the Gemini crypto exchange.

In the last couple of weeks, bitcoin has risen above $10,000 and dipped below it, but overall this year its value has climbed by 200%, giving hope to the crypto bulls, who were left out in the cold during the bear market of 2018.

Enter the Winklevoss twins, who have now warned Wall St banks that they have been “asleep at the wheel” when it comes to bitcoin and cryptocurrencies generally.

“Unlike the internet, which you couldn’t buy a piece of, you can actually buy a piece of this new internet of money,” Tyler and Cameron Winklevoss told CNN. They added, “It’s still a retail-driven market, from day one. And a lot of people have done really well. Wall Street has been asleep at the wheel.”

As Billy Bambrough at Forbes comments: “Bitcoin’s epic 2017 bull run, which saw the bitcoin price soar from under $1,000 per bitcoin at the beginning of the year to almost $20,000 in December, was largely thought to be due to Wall Street and that institutional investment could be poised to flow into bitcoin and crypto.”

However, the institutional investment didn’t materialise and the price of bitcoin crashed. The Winklevoss twins took a different approach, “We had to invest because we were afraid of missing out, we couldn’t miss out on this future.”

It appears they are now lobbying the Wall St banks to become more involved with the aim of seeing that institutional investment emerge this year, even if it didn’t appear in 2017.

Bambrough suggests that in some ways keeping the banks outside the market has helped bitcoin retail investors, and he cites teen bitcoin millionaire Eric Finman as an example. Finman recently announced that he is backing Metal, which launched in 2017, but has been revamped as a “all-in-one digital banking platform for cryptocurrency” — despite slumping 98% in value since its all-time high. Finman’s support comes as Metal Pay relaunches to compete with more directly with the likes of Venmo and PayPal, payment platforms that want users to store and send cash on their apps.

Meanwhile, Tyler and Cameron Winklevoss said they are open to partnering with Facebook chief executive Mark Zuckerberg on the social media giant’s Libra cryptocurrency project after it was revealed they have been in talks about joining the Libra Association.

The banks may appear to be losing out in this emerging market; it may even make banks a thing of the past. But there is a way to go before we’ll see that, even if these institutions are slumbering giants.

BTC is the new silver

On By mehranmuslimiblogIn Bitcoin, BlockchainLeave a comment

 

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You have probably read many articles saying that Bitcoin is the new gold. However, while this may yet prove to be true, at the moment it actually has more similarities with the silver market in the 1970s and 80s. This was a period that saw an extraordinary spike in silver trading for reasons that are remarkably like the activity around Bitcoin and a few other crypto currencies.

Forty years ago, the price of silver made it accessible to the average man on the street. Added to this, it didn’t have the kind of Wall St. or City of London elitism attached to it in the same way that gold has. These two situations encouraged the small investor to get into the silver market.

At least one experienced investor believes this is the same situation with the Bitcoin market. Mark Fisher, a renowned trader, says: “The reason people are so attracted to Bitcoin is because people want something that’s actually moved dramatically, that there’s no Wall Street to it. It’s the thing that every cab driver is talking about all day long.”

As he says, Bitcoin has attracted people who might not normally invest at all, partly because you can put in small, manageable amounts and because it is completely disconnected from big institutions and conventional investing. Anyone can get into it, from teens to grannies.

The decentralised nature of Bitcoin and all the other crypto currencies is what really appeals to many people. They like the fact that it doesn’t have any bureaucracy or rules surrounding it. Like silver in the 70s and 80s, Bitcoin feels like it was made for the people, not for the benefit of banks and other financial institutions.

And of course, the more popular Bitcoin becomes, the higher its price rises. In the last month or two we have seen phenomenal gains, much of this powered by mass adoption of Bitcoin in Asia. Now we are waiting to see what the big investors will do–they call them the ‘Wall St. Whales’ in Cointelegraph. Fisher predicts that when these guys get involved in the Bitcoin futures markets, which open next week, it is going to resemble the Wild West at the start. We will undoubtedly see some hugely volatile movements, but as long as there is movement, we know Bitcoin still lives and as investors we must hope the only way is up!