GP Bullhound, Saxo Bank Predictions Show Institutional Investors Could Be Crypto Industry’s Saving Grace For 2019 Bounce Back
The cryptocurrency scene has been troubled for a while, and the downward trend of the market has left many investors worried about what’s to come. However, there are some predictions from GP Bullhound and Saxo Bank that may change their minds. These two entities are both well-respected in the traditional world of finance, and they believe that institutional money is the key.
GP Bullhound (GPB) published “Cryptocurrency will Grow Up,” which discusses a major opinion among analysts that say that institutional money will help the market recover.
GPB shares that sentiment, and they’ve made a rather bullish prediction in that sense, saying,
“We are yet to see the best of cryptocurrencies. Blockchain activity is picking up with even traditional financial institutions ensuring they do not get left behind. 2019 should be the year institutional capital flows into cryptocurrency, with previous obstructions and tight regulations lifted.”
The cryptocurrency boom last year was correctly predicted by GPB, thought some may argue that it wasn’t so hard to predict. However, it increased the firm’s rating for predicting these kinds of changes. Of the predictions they made in 2018, there have been 9 out of 10 deemed accurate, so their predictions that these investments could improve the crypto space next year shouldn’t be taken lightly.
Enticing institutional investors to get involved in cryptocurrency is more of a matter of involving them in the distributed ledger technology, rather than cryptocurrency itself.
The report notes,
“We predict 2019 will be the year of institutional capital inflow into blockchain, which will not be solely financially motivated, but backed by increasing demand we see on the corporate and family office side and their desire to build positions. Initially this will happen through funds, equity investing into blockchain technology projects as well as financial instruments and derivative products related to major cryptocurrencies.”
One of the many opportunities that should bring in a significant number of institutional investors is Bakkt by the Intercontinental exchange. There are other regulated instruments that may play a role, like the Bitcoin Investment Trust by Barry Silbert’s Grayscale Investments. Others include CoinShares’ XBT Provider Bitcoin and Amun Crypto Market Basket Index ETP, who notably had the second-highest turnover in the Swiss market for exchange-traded products.
When considering the way that security token offerings (STOs) are coming to the forefront, there are many options for institutional investors to get involved in a comfortable way.
The GPB says,
“There is a massive wave of fully compliant security token offerings (‘STOs’) lined up and also the developments around tokenization of assets (‘TOAs’) is extensive – both are expected to continue to raise the bar on market standards very fast…”
Still, there are concerns about the lack of clarity in regulation, along with liquidity and custody on the exchanges.
Still, Olga Feldmeier of Smart Valor believes that crypto will keep progressing, saying,
“Cryptocurrencies will continue to innovate beyond the well-known bitcoin and Ethereum, and we will see many more coin and payment products emerging. All that will clear the way for mass adoption, which we will see in the second half of 2019.”
Right now, the GPB believes that there are several companies and partnerships to watch in the industry, like Alibaba, Goldman Sachs, and the partnership between IBM and Stellar. However, these are not all of the companies and partnerships listed. As far as crypto assets, GPB advises users to keep an eye on Bitcoin, Ethereum, Monero, and Stellar.
Though some businesses and consumers worry that blockchain technology is becoming less of a priority, GPB assures that this is not true at all.
“Underneath the surface, activity in Distributed Ledger Technology (‘DLT’) is in full speed, even within financial institutions.”
The GPB references a lesser-known company involved with this adoption named Calastone, who announced that blockchain will be the new home of its global fund transaction business entirely. It will reduce the costs of their investors, and will offer savings for Vanguard, BlackRock, Fidelity, and others. The company presently handles $80 billion in trading volume monthly and has already established 1,300 institutions in their network around the world.
Calastone’s chief executive, Julien Hammerson, said in a press release,
“in making this first step using blockchain, we are providing our customers with the requisite tools they need, to be future-ready.”
Saxo Bank has also put in some predictions for the market, but it seems to have been overlooked by the majority of financial media. In their “10 Outrageous Predictions” this month, they believe that a recession in Germany is imminent, as well as the departure of Jerome Powell from the US Federal Reserve as a result of President Trump’s decisions.
Their fifth prediction, however, is that Netflix and General Electric (GE) will end up in a debt crisis, which could result in the replacement of growth companies like the tech-sector’s FAANG stocks. Instead, they will be replaced with healthy cash flows and growing dividend payments. With the struggling state of GE, Saxo believes that there will be a liability rollover involving $100 billion, which results in “pushing the credit default price above 600 basis points.”
Saxo goes on, predicting,
“The carnage even spreads as far as Netflix where investors suddenly fret the firm’s fearsome leverage, with a net debt to EBIDTA after CAPEX ratio of 3.4 and over $10bn in debt on the balance sheet. Netflix’s funding costs double, slamming the brakes on content growth and gutting the share price.”
So, where does cryptocurrency come in? Credit is a crucial part of the traditional finance structure, allowing companies to grow without profit at the moment. It is breaks down, traditional finance loses its credibility and that’s a big problem.
Saxo’s chief economist, Steen Jakobsen, says,
“This year’s edition [of its outrageous predictions] has a unifying theme of ‘enough is enough’. A world running on empty will have to wake up and start creating reforms, not because it wants to but because it has to. The signs are everywhere. We think 2019 will mark a profound pivot away from this mentality as we are reaching the end of the road in piling on new debt and next year will see us all beginning to pay the piper for our errant ways.”
Ethereum World News reported on this issue, noting that the “breakdown of the credit cycle” could be the next action to progress crypto adoption, much in the same way that the Great Recession less the economy to Bitcoin’s creation.
As the news media outlet put it,
“Even the fiat-loving skeptics may be forced to consider what was once the unthinkable.”