Crypto August In Review: Institutional Interest Rising, Market Gradually Recovering

Nick Chong

6 years ago

5 mins read

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In any nascent market, the price of an asset is often uncorrelated to the success of the underlying industry. And for crypto, it seems to be much of the same, with this budding space seeing its fair share of unrelenting growth, adoption, and success, even though prices may say otherwise.

Crypto Sees Rapid Development, Even In The Middle Of Summer

In a recent CNBC appearance, Arthur Hayes, BitMEX’s CEO and co-founder, noted that Q3 of 2018 is when the “(crypto) party is going to start again.” But in the eyes of some optimists, the party has already started, with crypto seeing a collection of positive developments smack dab in the middle of the sweltering summer season.

Adoption

In terms of adoption, via retail and institutional investors alike, the use and introduction of cryptocurrency products seem to be as hot of a topic as ever. Goldman Sachs, one of the most respected firms on Wall Street, recently hinted at offering a cryptocurrency custody service, which may open the door for an influx of interested investors. While this news is bullish in and of itself, Goldman isn’t the only legacy market giant to make a foray into blockchain-based assets, with the lesser-known Northern Trust, which still holds a hefty $10.7 trillion under management, working hand-in-hand with cryptocurrency hedge funds.

For many other traditional institutions, the sentiment surrounding this industry is near-identical, with innovators within these companies doing their best to push for multi-faceted crypto-focused products.

On the other end of adoption, exchange volumes have all but dried up, but retail investors still seem keen to invest in crypto, eventually, that is. Although the common Joes in western countries have laid back on allocating capital to crypto, citizens of countries in financial turmoil have sought solace in assets like Bitcoin, with thousands of individuals in Turkey and Venezuela seeking crypto as an alternative to fiat.

Brian Armstrong, Coinbase’s CEO and founder, recently took to the Bloomberg stage to provide an intriguing insight into the adoption and the growth of this industry in a 26-minute interview. Armstrong, like many others, likened decentralized technologies to the internet boom of yesteryear, noting that even in market troughs widespread adoption can still be achieved. The Coinbase executive elaborated, stating:

“People’s expectations are all over the map, but the real world adoption and usage (of cryptocurrencies) are pretty steadily increasing each year.”

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Products & Services

Arguably, August 2018 was one of the important months in modern crypto history, with the Intercontinental Exchange, dubbed “ICE,” joining hands with Microsoft, Starbucks and a variety of prominent corporate giants and venture investors to launch Bakkt. For those who didn’t get the memo, Bakkt is expected to become an all-encompassing, one-stop shop for “institutional, merchant and consumer participation in digital assets.”

Marketing lingo aside, the recently-established Bakkt intends to offer physically “bakkted” Bitcoin futures by November, which will be “much better for Bitcoin’s market cap,” as per an analyst from the Ironwood Research Group. Following the CFTC’s stamp of approval, the vehicle is likely to garner the interest of thousands, if not millions of investors. This is just one of the many reasons why Brian Kelly, CNBC’s in-house crypto analyst called it “the biggest news of this year.”

Staying with the theme of industry-altering products, Binance recently dropped a sneak peak of its upcoming decentralized exchange, which intends to revolutionize how crypto assets are traded, issued and transferred. While a Sweedish firm introduced U.S. support for its Bitcoin Tracker One vehicle, which is an exchange-traded note for those who are unaware. The likes of Fundstrat’s Tom Lee likened this ETN to a crypto-backed ETF offering, noting the arrival of Bitcoin Tracker One could propel this industry.

While the product has not lived up to Lee’s expectations as of yet, proponents of ETNs, ETFs and the like continue to hope for the best.

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Regulation

Since the Bitcoin’s earliest years, global regulators have done their best to investigate and understand the concept, reality, and ethos of crypto assets. While there have undoubtedly been misunderstandings for the better part of a decade, with some governmental figures fearing Bitcoin and other digital assets with a passion, regulators have begun to wrap their heads around this world-changing revolution.

Now, regulators, whether they hold allegiance to the U.S., Japan or beyond, intend to approach the industry in a bid to protect and accommodate common investors, rather than stamping out anything related to crypto in a fit of confusion and misunderstanding. Most recently, this ideology of protecting consumers has taken the form of the SEC delaying its verdict regarding the VanEck and SolidX ETF, while also denying (and subsequently revisiting) nine Bitcoin-backed ETF applications from ProShares, Direxion, and GraniteShares.

As revealed in the legal documents pertaining to the SEC’s verdicts, the heavy-handed regulatory body cited manipulation worries as a primary reason why the applications failed, adding that Bitcoin markets lack “significant size” to be properly insured against malicious actors.

In a move that confirms that regulators only aim to accommodate crypto investors, Toshihide Endo, commissioner of the Financial Services Agency, noted that he intends to not “curb (the crypto industry) excessively, but would rather foster and care for it “under appropriate regulation.”

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Bulls Remain Bullish

Many industry leaders, analysts, researchers, and commentators alike have begun to note that the mid to long-term prospects of decentralized products and assets look promising, even though prices may be down on the year. It is important to note that this bullish sentiment does not only involve prices, as some idealists have sought to ignore the hard numbers of crypto entirely, as the day-to-day fluctuation of BTC or altcoins is a result of speculation, rather than the quantified success of this space. Regardless, as Coinbase CEO Brian Armstrong stated in the aforementioned interview, “it’s getting harder and harder to become a crypto skeptic.”

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Nick Chong

I am a writer who has been following Bitcoin for years now. My insights and interviews have been featured in leading publications in the industry such as LongHash and Decrypt. I own a small amount of Bitcoin.