Investors in the cryptocurrency market are waiting for a new bull run after a market in which most virtual currencies lost between 65% and 95%. However, the stability that the markets are experiencing in the last weeks can be related to institutions and wealthy investors accumulating cryptocurrencies.
During the last months, there has been an important development related to infrastructure specifically designed for institutions. At the same time, the market has seen progress towards regulation and processes’ improvement.
For example, Goldman Sachs and Citigroup are working on their own crypto custodians that will be approved by regulators and offered to institutions. At the same time, Morgan Stanley will be offering Bitcoin swap trading and already has the infrastructure necessary to serve its clients. Moreover, countries such as the United States, Japan and Spain are working in possible regulations for the market.
Furthermore, the Intercontinental Exchange (ICE) will also be launching a new product and service specifically built for institutions. This would allow them to gain exposure to the crypto market with a recognized and regulated player.
In addition to it, in the next months, the U.S. Securities and Exchange Commission (SEC) could approve a Bitcoin and crypto exchange-traded fund (ETF). It would also allow companies and customers to start investing in virtual currencies in a regulated environment.
During the last two months, Bitcoin has remained stable between $6,400 and $6,800 dollars. There was just a small period of time in which the most valuable currency broke out of the $7,000 mark.
According to data provided by over-the-counter (OTC) brokerages and other important Wall Street firms, institutional investors are currently buying virtual currencies to accumulate massive amounts of coins.
For example, Bobby Cho, global head of trading at Cumberland, said that the accumulation of institutional investors has allowed the market to operate stably in the current levels.
About it, he said:
“One of the biggest criticism of crypto by institutional investors has been the volatility. Over the last four to six months, the market has been trading in a very tight range, and that seems to be corresponding with traditional financial institutions becoming more comfortable diving into the space.”
Moreover, he explained that a significant part of the OTC deals which DRW have processed come from Asian clients. This could be related to miners selling their coins or buyers from countries such as Japan, Hong Kong and China are accumulating cryptocurrencies.
He then said that institutional investors have already entered the market and that crypto investors should know about that rather than ‘waiting’ for them to pump the prices.
The head of growth at SFOX, Danny Kim said that the stability in the cryptocurrency market has been created by an influx of institutional capital.
“Before institutional firms were actively trading crypto or heavily involved (before 2018) bitcoin price differences between exchanges varied as high as 4.5%.”
Yale University, for example, has decided to invest in two important cryptocurrency funds. The Ivy League college did not provide information about how much money they have decided to invest.
The crypto market is receiving an important number of investors that before were not participating. Institutions are starting to place their funds in the crypto space and this will clearly be seen in the near future.