Like it or not, the crypto market hasn’t had an optimal year, with the collective valuation of all crypto assets tumbling by upwards of 75% since all-time highs in January 2018. However, in spite of the tumultuous market that put off many retail investors, institutions still seem ready to allocate resources, such as time and capital, to this budding industry.
Hedge Funds Are Starting To Dominate The Institutional Crypto Scene
Since the tumultuous market conditions started, analysts, investors, and industry leaders claimed that the widespread arrival of institutional interest and capital would spark the next exponential bull run that crypto has become known for. So on October 1st, Bloomberg dropped a bombshell on the crypto community, revealing that institutions are poised to make meaningful contributions into this space, contrary to popular belief.
According to Bobby Cho, worldwide head of trading at Cumberland, DRW’s cryptocurrency trading division, hedge funds now dominate the institutional scene, overtaking the family offices of high-net-worth individuals (HWNI) when it comes to over-the-counter crypto trades of over $100,000 per transaction.
Cho explained what this fact meant, revealing:
What that’s showing you is the professionalization that’s happening across the board in this space. The Wild West days of crypto are really turning the corner.
Circle, the crypto-focused fintech startup that has been backed by Goldman Sachs, corroborated this figure, with the CEO of the Boston-based firm divulging that Circle Invest has seen “triple-digit growth” of individuals enrolling into its OTC business over the past few months.
According to researchers from Digital Assets Research and TABB, the OTC crypto market took in anywhere from $250 million to $30 billion in volume per day in April. While this figure likely hasn’t aged well, Digital Asset Research claimed that OTC volume is still booming in some respects, as the low volatility of the market has enticed a growing number of institutions.
Cho, the aforementioned DRW executive, explained — “Over the last four to six months, the market has been trading in a very tight range, and that’s seems to be corresponding with traditional financial institutions becoming more comfortable diving into the space.”
Institutions Continue To Launch Crypto Infrastructure Projects, Investment Vehicles
Despite the positivity around the arrival of institutional capital, it would be unfair to count out the firms who have begun to set-up shop in crypto through other means. As revealed by Diar, crypto’s leading newsletter, five of America’s leading banks have overtly shown interest in crypto assets and the industry surrounding them.
In spite of JP Morgan CEO Jamie Dimon’s scalding comments against cryptocurrencies, the New York-based institution, for one, has begun to look into an unspecified array of blockchain-focused projects, while also considering launching its own crypto assets branch.
Goldman Sachs, one of the largest financial firms in the world, has also shown that it is ready to down the red pill. Despite reports that claim that the firm isn’t ready to establish an in-house crypto trading desk, the institution’s CFO dubbed these reports “fake news,” indicating that a Goldman Sachs cryptocurrency trading service isn’t out of the realm of possibility.
These developments have been commended by Mike Novogratz, the CEO of Galaxy Digital, who claimed the establishment of such platforms will facilitate “real money investors” in the near future, adding that in three to six months, big institutions and pension funds will be ‘given’ the ‘all clear’ to start investing in crypto assets.