2017- The herd is coming
In a speech in 2017, Wall Street investor Mike Novograztz talked about the emerging cryptocurrency markets which are now becoming more accepted by the institutional investors like Goldman Sachs. Whilst Bitcoin has been around since 2008, it is seems that only last year did we really see a turning point in approach from the bigger investment companies.
In reality it was only a matter of time until Bitcoin trading for individual investors were going to turn the heads of the bigger firms. The interest of customers in the currencies ultimately would lead to banks pursuing options in terms of integrating the cryptos in ways they can.
This is despite certain banks being highly apprehensive towards the currency. In 2017, JP Morgan CEO, Jamie Dimon went as far as to call Bitcoin “a fraud”.
BREAKING: JPMorgan CEO Jamie Dimon says bitcoin “is a fraud” that will eventually blow up https://t.co/ZnbSx16LT9
— CNBC (@CNBC) September 12, 2017
Nonetheless, towards the end of 2017, despite the seeming reluctance, certain banks gradually became more open towards the idea, such as Goldman Sachs who began conducting their own research into the trading of the currency. Clearly, the apprehension could only have lasted so long given the increased pressure of the customers. Since then however, developments have been even more interesting in terms of the adoption of crypto.
2018 – institutional adoption?
With the interest of banks being turned in 2017, it seems that this year can be the time for the cryptocurrency to truly move towards institutional adoption. The turn of the year saw Bitcoin being traded on the stock market for the first time, which further served to legitimize the currency in the eyes of many skeptics. This set the tone for what was to come at the turn of the year.
Despite the value of most cryptocurrencies seeing a marked drop since the beginning of the year, from the perspective of institutional investors there has been no slow down whatsoever. This year so far, we have seen Goldman Sachs’s investigations come to fruition as they launched the first desk to allow the trading of Bitcoin futures.
This is a big step, as it now seems that the institutional trading of Bitcoin seems inevitable. Obviously, the banks are approaching this with caution and is not trading actual Bitcoins initially, however, it seems that it is only a matter of time until we will be able to purchase Bitcoins from banks.
Furthermore, both CME and Bloomberg have looked to create crypto trading services so that users can monitor their market rates and performances quickly and efficiently. There are also some more covert signs that changes are coming which have not been announced formally but indicate that something will change.
For example, Coinbase setting up offices in New York seems a tell-tale sign that it’s likely to be doing so to facilitate simpler trading as most of the headquarters of the big institutional players are there. Furthermore, the exchange has recently stepped up its facilitation of larger cryptocurrency trades which seems to indicate that it is looking to attract hedge fund managers who are looking to undertake some of the larger traders.
There are still undoubtedly certain hurdles to overcome, as banks were not keen on adopting Bitcoin for a very specific reason (or rather reasons). For a start, there is the rather unclear issue of regulation to sort out. Most countries’ laws are simply not built for this new cryptocurrency craze and it is something that must be addressed soon before the big investors really commit.
The next factor to consider is the fact that the infrastructure of this new market is undoubtedly lacking certain levels and security that would be required for major to banks to want to play a key role in the implementation of the cryptocurrencies.
However, if said issues are addressed, we can be entering a very exciting time indeed from the perspective of cryptos. If banks are to adopt Bitcoin and other cryptocurrencies it seems that the only way that their value can go in the near future is up. One could argue however that in the long run, the institutional adoption of the crypto sphere may actually serve to defeat the purpose of the currencies to begin with and could spell the end of this market as we know it.
For the moment at least, it does seem that HODLing would be an adequate solution as it seems that bitcoin value can be found in it as an asset and not just as a successful implementation of the blockchain technology. We are still not even half way through the year however, so this is something that needs to be watched over with great curiosity.