How much institutional demand is there really for crypto?
Institutional money would undoubtedly change the investing atmosphere for crypto, but is it really coming?
Crypto analysts have been pounding the table for months now that institutional money is coming and when it does we will see an even bigger fomo rally than we saw late in 2017.
The claim has been that there have been 2 major hurdles holding institutions back from investing.
Those being a lack of regulator clarity and there being a lack of regulated and 'safe' trading markets for them to confidently enter.
We have gotten a lot more clarity on the first, at least in regards to bitcoin, and we have gotten some development in way of the second as well.
Specifically, the SEC said that bitcoin absolutely is not a security and there have been many custody solutions as well as regulated trading venues popping up over the past few months.
Is this really enough to get institutional money to enter?
That is the billion dollar question.
According to Goldman Sachs, Morgan Stanley, and BlackRock, and now Bloomberg, the answer is no:
https://ethereumworldnews.com/institutional-investing-bitcoin-etf-2018/
According to them there just hasn't been that much demand from their institutional clients to get into crypto.
Larry Fink, the CEO of BlackRock had this to say:
"I don’t believe any client has sought out crypto exposure…I’ve not heard from one client who says, ‘I need to be in this."
(Source: https://ethereumworldnews.com/institutional-investing-bitcoin-etf-2018/)
However, that may not be the whole story...
Just because they haven't seen much demand, or at least admit to that demand, there has been a few notable entrants into the crypto market that are just now starting to dip their toes in.
Notably I am talking about major endowments.
(Source: https://www.ccn.com/breaking-harvard-stanford-mit-have-all-invested-in-cryptocurrency-funds/)
Harvard, Yale, Stanford, and MIT have all announced recently that they have invested in some crypto-related funds.
https://www.ccn.com/breaking-harvard-stanford-mit-have-all-invested-in-cryptocurrency-funds/
This is significant because Mike Novogratz said there will be fomo among endowments once they start entering the space.
According to Novogratz these endowments basically all invest in the same products, so when a few start investing the rest will follow.
These endowments collectively control hundreds billions of investing dollars.
Once they see the value of portfolio diversification with some crytpo holdings, they will all want some exposure.
So, while the demand may not be as high as we would like among other institutional clients, the endowments are starting to dip their toes in and that is a very big deal for bitcoin and crypto.
Stay informed my friends.
Image Source:
Follow me: @jrcornel
Just a couple of really big players is all we need to bring crypto back to life.
That is a good point. A couple billion flowing in and it would be lift off.
I am sure they are just testing the water. Hard for them to go all-in 😎
Yea I can't imagine they will ever go much more than something like a 1-3% allocation max, but if they all did that, that would be tens of billions of dollars flowing in, possibly hundreds of billions.
That is the right math. Portfolio theory suggests better returns by putting something below 3% into a decorrelated asset like BTC.
When they all do that, that will represent a ton of demand coming in.
Billions of dollars waiting on the sidelines, it's going to happen soon enough. Just make sure you have enough crypto before it does
I am ready now. When will it happen?
Nobody knows the exact date or anything, but probably sometime next year.
Yea I am thinking that as well.
Bitcoin offers any resident of the world to get rid of the control of economists who believe that they should not listen to the lessons of history.
Posted using Partiko Android
You mean with fiat currency? It has failed every time previously, but this time it will work! (sarcasm)
... or are new cryptos just going to be created to replace the generation that is out there now?
That is possible. Hopefully not though. Bitcoin is the most likely to last long term. Everything else is up in the air. Need to get them established with a robust user base as quickly as possible.
So...they don't think there's a demand because none of their clients went to them to buy crypto...rather than going to someone that specializes in it? Somehow I don't think that means jack shit.
We're still in early days by the numbers. There will be jumps that make last year look small...and they won't be "pump and dumps", they'll get legitimate rises and then falls due to people taking profit. This isn't proof of some "correction" because the coin is overvalued, but rather the natural action of the market.
Currently the amount of money and users is tiny. We will continue to grow. That doesn't necessarily mean that crypto in it's current form will replace money...but it is useful...and it is undervalued considering the number of users and amount of money in it, at the same time it is literally saving nations as some users put their money in it and use it daily, because it is a better choice in many cases than fiat or traditional monetary services, which are often a lot harder and more expensive to use, ironically, considering how difficult it is for users to get into crypto.
Exactly. I think bitcoin is incredibly useful even in its current form. No it is not a good source of money. However, it can be a good diversification tool in a well diversified portfolio because it isn't correlated with anything else. Plus it is deflationary meaning you don't have to worry about it being inflated away. Then you also have its use case for sending international payments, it is significantly faster and cheaper than legacy systems. Then top all that off with the fact that it isn't controlled by any single entity and I think it has some incredibly valuable use cases right now even in its current form, and that is even if it never catches on as a popular currency. If that happens, look out.
Bitcoin seems slow and expensive...until you try to get paid for a job online with traditional systems. Wire Transfer? $50-100+, and it will take days to possibly a week or more, and they'll still charge you if it doesn't go through for whatever reason, including a discrepancy in their own system that would be solved by any idiot with even 10% of a brain. Paypal? Pretty hefty fees, and again takes days. Other programs? May take weeks or even months, and they may never go through.
Yes, I have actually had to wait months before to be paid for a job.
Fuck legacy payments. It's pathetic that our monetary system is so pathetic.
I want to think that there has to be systems out there that are at least as good as crypto for sending payments...but often they're small and not used by very many people. For example, my bank has some kind of system that's pretty fast, but who uses my exact bank? Not anyone random I wanna send money to.
Yes and depending on your bank, sometimes you have to write a letter or give a phone call as to why you want to move a decent sized chunk of change. It is my money, why should I have to write you a letter and tell you what I want to do with my money?!
I've heard about that when people are buying houses and things. It's really fucking stupid and none of their business. Everyone talks about guilty until proven innocent...but that's not really the way of the world. Everyone assumes everyone has the most nefarious motives.
It gets pretty absurd when you are moving your money from one account to another account at the same bank... needless to say I will be closing both accounts shortly.
That makes it easy when FIAT crashes. :P And when the banks won't give out any money anymore, because they're leveraged so highly that if even a small percentage of people take their money out, we're all screwed.
Of course, that happening isn't highly likely, since banks are convenient. Even when you put your money into crypto, it's just transferring it from one bank to another.
It's still early. I'm tucked in waiting for the roller coaster ride to begin.
Last year's rally really started to take off around this time, for bitcoin anyways.
I would rather have university endowments investing in the space than those fools who think a market isn’t mature enough to warrant interest until it has derivatives. Actual words out of a CFTC official’s mouth.
What they mean of course is that if they can’t manipulate it reliably, what use is it?
Posted using Partiko iOS
Yep, endowments will be huge for crypto. Specifically bitcoin, but if they are buying crypto funds, perhaps they will be good for several coins.