{"id":8271,"date":"2020-02-26T23:20:45","date_gmt":"2020-02-26T21:20:45","guid":{"rendered":"https:\/\/forklog.media\/?p=8271"},"modified":"2020-02-27T23:41:09","modified_gmt":"2020-02-27T21:41:09","slug":"institutional-players-ramping-up-investments-in-bitcoin-whats-in-it-for-crypto-industry","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/institutional-players-ramping-up-investments-in-bitcoin-whats-in-it-for-crypto-industry\/","title":{"rendered":"Institutional Players Ramping up Investments in Bitcoin: What\u2019s in It for Crypto-Industry"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Many crypto-enthusiasts anticipate the advent of large investors to make Bitcoin price grow rapidly and pull the whole market along with it. Galaxy Digital\u2019s Mike Novogratz <\/span><a href=\"https:\/\/youtu.be\/DpnyYYyC8Xs\"><span style=\"font-weight: 400;\">believes<\/span><\/a><span style=\"font-weight: 400;\"> that Bitcoin will soon pass the $20,000 mark, chiefly driven by the regulated exchanges aimed at professional market participants.<\/span><\/p>\n<p><!--more--><\/p>\n<p><span style=\"font-weight: 400;\">Yet, mass adoption and the integration between the crypto-industry and traditional financial structures are slow. People have been talking about hoards of institutional investors &#8220;coming soon&#8221; for years now. Most of the conservative players in the traditional market are still concerned about the <\/span><a href=\"https:\/\/www.cnbc.com\/2020\/01\/21\/ray-dalio-at-davos-cash-is-trash-as-everybody-wants-in-on-the-2020-market.html\"><span style=\"font-weight: 400;\">volatility of cryptocurrencies<\/span><\/a><span style=\"font-weight: 400;\">, <\/span><a href=\"https:\/\/coinmetrics.substack.com\/p\/coin-metrics-state-of-the-network-b67\"><span style=\"font-weight: 400;\">exchange hacks<\/span><\/a><span style=\"font-weight: 400;\">, <\/span><a href=\"https:\/\/www.theblockcrypto.com\/post\/56207\/bzx-attacked-again-645k-in-eth-estimated-to-be-lost\"><span style=\"font-weight: 400;\">DApp vulnerabilities<\/span><\/a><span style=\"font-weight: 400;\">, and the ever-present regulatory uncertainty.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In 2018 and 2019, the mood of cautious traditional investors and their perception of the new assets started changing. The <\/span><a href=\"https:\/\/www.theblockcrypto.com\/genesis\/55538\/january-by-the-numbers-crypto-volumes-sentiment\"><span style=\"font-weight: 400;\">growth<\/span><\/a><span style=\"font-weight: 400;\"> of CME\u2019s Bitcoin futures popularity, the development of custodial services and OTC-platforms, multiple applications for ETFs, <\/span><a href=\"https:\/\/twitter.com\/Bakkt\/status\/1175938226554658824\"><span style=\"font-weight: 400;\">Bakkt launch<\/span><\/a><span style=\"font-weight: 400;\">, crypto-options, and the <\/span><a href=\"https:\/\/www.theblockcrypto.com\/genesis\/55363\/gbtc-now-holds-more-than-285000-bitcoin-1-57-of-all-btc\"><span style=\"font-weight: 400;\">rise<\/span><\/a><span style=\"font-weight: 400;\"> of Grayscale Bitcoin Trust are the signs of a maturing market and the growing demand from the institutional players.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this piece, we\u2019ve looked into the market trends and the barriers to the institutionalization of crypto, as well as the whales\u2019 activity in particular market sectors.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">\u201cBitcoin and Everything Else\u201d<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Despite the rapid development of altcoins and DApps, many people still primarily associate the crypto-market with Bitcoin, the first cryptocurrency both by age and market cap. Moreover, some BTC holders are still unaware of alternative cryptocurrencies or have merely heard something about it and didn\u2019t feel like getting into details.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Scott Army, the founder and CEO of Vision Hill Group, <\/span><a href=\"https:\/\/www.coindesk.com\/institutional-investment-in-crypto-top-10-takeaways-of-2019\"><span style=\"font-weight: 400;\">notes<\/span><\/a><span style=\"font-weight: 400;\"> that investors see the crypto-world as Bitcoin and \u201ceverything else.\u201d The latter category includes:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Web3 innovation;<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Decentralized Finance (DeFi);<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Decentralized Autonomous Organizations (DAO);<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">smart-contract platforms;<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">security tokens;<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">digital identity;<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">data privacy;<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">blockchain-gaming;<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">enterprise blockchain or distributed ledger technology.\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">There are more whales investing just in Bitcoin than those investing in \u201ceverything else\u201d or even in somewhat diversified mostly-Bitcoin portfolios. The first crypto is perceived as the cryptocurrency market <\/span><a href=\"https:\/\/www.investopedia.com\/terms\/b\/beta.asp\"><span style=\"font-weight: 400;\">beta<\/span><\/a><span style=\"font-weight: 400;\"> and a counterpart to the S&amp;P 500.<\/span><\/p>\n<blockquote><p><b><i>\u201cBitcoin\u2019s size and its institutionalization (futures, options, custody, and clear regulatory status as a commodity), have enabled it to be an attractive first step for allocators looking to get exposure (both long and short) to the digital asset market, suggesting that Bitcoin is perhaps positioned to be digital asset market beta, for now,\u201d<\/i><\/b><i><span style=\"font-weight: 400;\"> Army wrote.<\/span><\/i><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">Still, despite Bitcoin\u2019s status and its substantial long-term ROI, investors still hesitate to get into the market big-time.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Thorny Path to Mass Adoption<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">According to Scott Army, digital currencies and blockchain tech are extensively complicated things that most people, including the whales, find hard to comprehend.<\/span><\/p>\n<blockquote><p><b><i>\u201cThe reality is that institutional investors are still learning\u2014slowly getting comfortable\u2014and this process will continue to take time,\u201d <\/i><\/b><b>he noted.<\/b><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">Army believes that some of the interested investors are confident it\u2019s too early to invest large sums into the crypto-market because of the numerous risks, including those related to regulation.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Large players require simplicity in investment. They want their instruments to be as close to traditional financial products as possible. They don\u2019t want to have to dig into any sort of technical intricacies.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Speaking about the factors driving large players into the market, Kari S. Larsen, a partner at Digital Currency Group, <\/span><a href=\"https:\/\/theblockchainland.com\/2019\/12\/05\/rise-institutional-investment-cryptocurrency\/\"><span style=\"font-weight: 400;\">noted<\/span><\/a><span style=\"font-weight: 400;\">:<\/span><\/p>\n<blockquote><p><b><i>\u201cExchanges are changing their focus from retail traders to institutional traders, providing such customers better ability to customize the front end of their trading platforms and providing APIs that better suit what institutional traders are used to.\u201d<\/i><\/b><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">Oliver von Landsberg-Sadie, CEO of financial services group BCB, believes that the market growth in 2019 was driven by \u201cfinancial institutions who are diversifying stale portfolios and finally have the professional machinery to do so.\u201d<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The trend towards institutionalization was also <\/span><a href=\"https:\/\/bitcoinmagazine.com\/articles\/institutional-cryptocurrency-interest-is-booming-regulations-need-to-catch-up\"><span style=\"font-weight: 400;\">acknowledged<\/span><\/a><span style=\"font-weight: 400;\"> by Boris Bohrer-Bilowitzki, the head of sales at digital assets custody and portfolio management firm Copper Technologies<\/span><\/p>\n<blockquote><p><b><i>\u201cYes, without a doubt, from very public entrances like U.S. pensions and university endowments to European pension funds, family offices from all over the world, and sophisticated fund structures and strategies. There is also an increasing number of U.S. high-frequency trading getting into this space,\u201d<\/i><\/b><i><span style=\"font-weight: 400;\"> Boris told Bitcoin Magazine.<\/span><\/i><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">In his opinion, up until recently, one of the main barriers to institutional adoption was the lackluster development of professional custodial solutions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Institutionalization is an important step towards the global adoption of cryptocurrencies as an asset class. But for as long as startups and traditional financial institutions keep building the infrastructure and products for the professional players, regulation will remain the key challenge.<\/span><\/p>\n<blockquote><p><b><i>\u201cInstitutional Investors are eager for more regulatory clarity, particularly in the U.S.,\u201d <\/i><\/b><i><span style=\"font-weight: 400;\">stressed Scott Freeman, co-founder and partner of JST Capital.<\/span><\/i><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">Yet, Bohrer-Bilowitzki sees the progress made over the last year:<\/span><\/p>\n<blockquote><p><b><i>\u201cI think the technology is there, but what is still lacking is an understanding at a regulatory\/industry level about what custody means for digital assets. The regulatory landscape still needs to improve. The lack of agreement among national\/regional bodies is still discouraging to some. But this too is changing rapidly for the better.\u201d<\/i><\/b><\/p><\/blockquote>\n<h2><span style=\"font-weight: 400;\">Investors See Potential in Crypto<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">According to Crunchbase, the volume of venture investments in blockchain and crypto-companies calculated for Q1\u2013Q3 2019 exceeded $2 billion.<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignleft\" src=\"https:\/\/forklog.com\/wp-content\/uploads\/Crunchbase.png\" alt=\"Private funding volume in blockchain and cryptocurrency companies, excluding ICOs\" width=\"1024\" height=\"657\" \/><\/p>\n<p><span style=\"font-size: 10pt;\"><i><span style=\"font-weight: 400;\">Private funding volume in blockchain and cryptocurrency companies, excluding ICOs. Source: Crunchbase.<\/span><\/i><\/span><\/p>\n<p><span style=\"font-weight: 400;\">The biggest deals were:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Robinhood with <\/span><a href=\"https:\/\/twitter.com\/RobinhoodApp\/status\/1153334876340281344?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1153334876340281344&amp;ref_url=https%3A%2F%2Fforklog.com%2Fdruzhestvennaya-k-kriptovalyutam-platforma-robinhood-privlekla-323-mln-kapitalizatsiya-vyrosla-do-7-6-mlrd%2F\"><span style=\"font-weight: 400;\">$323 million<\/span><\/a><span style=\"font-weight: 400;\"> over a Series E round. The company\u2019s resulting capitalization reached $7.6 billion;<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Bithumb with <\/span><a href=\"https:\/\/cointelegraph.com\/news\/south-korea-bithumb-exchange-operator-gains-200-million-from-japanese-investment-fund\"><span style=\"font-weight: 400;\">$200 million<\/span><\/a><span style=\"font-weight: 400;\"> over a Series A round attracted despite the 2018\u2019s losses and the hack in June 2019;<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Ripple with <\/span><a href=\"https:\/\/fortune.com\/2019\/12\/20\/ripple-raises-200-million-xrp-cryptocurrency\/\"><span style=\"font-weight: 400;\">$200 million<\/span><\/a><span style=\"font-weight: 400;\"> by the end of a Series C round. As a result, the company\u2019s market cap got to the $10 billion mark;<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Kraken with <\/span><a href=\"https:\/\/www.coindesk.com\/crypto-kraken-acquires-crypto-facilities\"><span style=\"font-weight: 400;\">$100 million<\/span><\/a><span style=\"font-weight: 400;\">, reaching $3 billion market capitalization.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">In March 2019, <\/span><a href=\"https:\/\/medium.com\/@PanteraCapital\/block-reward-halving-and-venture-fund-iii-closing-pantera-blockchain-letter-march-2019-5a32df8bb9d0\"><span style=\"font-weight: 400;\">Pantera Capital raised $160<\/span><\/a><span style=\"font-weight: 400;\"> million for a Venture Fund III investment project. In April 2019, the launch of a $50-million fund Proof of Capital was announced. HTC was the primary investor. Similarly, Blockchain Capital <\/span><a href=\"https:\/\/www.theblockcrypto.com\/daily\/55159\/blockchain-capital-is-raising-a-fifth-fund-targeting-250-million\"><span style=\"font-weight: 400;\">is going to raise $250 million<\/span><\/a><span style=\"font-weight: 400;\"> for its fifth investment fund.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to The Block, a security-token issuer Securitize <\/span><a href=\"https:\/\/www.theblockcrypto.com\/daily\/55199\/securitize-anchorage-valuations-revealed-in-document-from-one-of-cryptos-biggest-investors\"><span style=\"font-weight: 400;\">raised<\/span><\/a><span style=\"font-weight: 400;\"> $15 million from Sony and other famous companies. A custodial service Anchorage <\/span><a href=\"https:\/\/twitter.com\/Anchorage\/status\/1148920213351493633\"><span style=\"font-weight: 400;\">raised<\/span><\/a><span style=\"font-weight: 400;\"> $40 million over a Series B round involving Visa. Blockchain Capital is invested in both companies.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There are also notable deals by Chainalysis ($30 million), Elliptic ($23 million), BlockFi ($18.3 million in 2019 and $30 million in February 2020), and Compound ($25 million).<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Banks and Pension Funds<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Over 40 banks in Germany <\/span><a href=\"https:\/\/www.handelsblatt.com\/finanzen\/banken-versicherungen\/digitale-assets-banken-wollen-ins-krypto-geschaeft-einsteigen\/25521910.html?ticket=ST-171730-RkkjGiJdhuSfqL3ii92K-ap6\"><span style=\"font-weight: 400;\">are interested<\/span><\/a><span style=\"font-weight: 400;\"> in getting permission to operate a crypto-custody business.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">One of the first banks to do so was SolarisBank AG based in Berlin. The institution has previously registered a subsidiary called Solaris Digital Assets to provide said services.<\/span><\/p>\n<blockquote><p><b><i>\u201cDigital assets will fundamentally change the financial market. As soon as it becomes easier to buy and store Bitcoin and other cryptocurrencies, we expect strong growth,\u201d <\/i><\/b><i><span style=\"font-weight: 400;\">said Michael Offermann, head of crypto banking at SolarisBank.<\/span><\/i><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">In February 2019, pension funds in Fairfax County, Virginia, <\/span><a href=\"https:\/\/thenextweb.com\/hardfork\/2019\/02\/12\/morgan-creek-blockchain-pension\/\"><span style=\"font-weight: 400;\">invested $40 million<\/span><\/a><span style=\"font-weight: 400;\"> into the crypto-industry through Morgan Creek venture firm. Later the same year, these funds <\/span><a href=\"https:\/\/www.coindesk.com\/pension-funds-put-50-million-into-morgan-creeks-new-blockchain-fund\"><span style=\"font-weight: 400;\">invested another $55 million<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The bulk of Morgan Creek Digital\u2019s assets is allocated for blockchain-related infrastructure companies, while about 15% goes into crypto-assets. According to Andy Spellar, the chief investment officer of the employee\u2019s fund, venture investments are getting much more attractive on the backdrop of low interest and ROI from traditional deposits.<\/span><\/p>\n<blockquote><p><b><i>\u201cIt does so far exhibit some uncorrelated behavior relative to other asset classes,\u201d <\/i><\/b><i><span style=\"font-weight: 400;\">he added.<\/span><\/i><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">Therefore, even conservative institutional players like banks and pension funds are interested in new opportunities to diversify their investment portfolios. The most progressive financial institutions are aiming not only to lower the correlation of investments with the traditional markets but to increase the profitability as well. According to <\/span><a href=\"https:\/\/research.binance.com\/analysis\/bitcoin-diversification-benefits#fn14\"><span style=\"font-weight: 400;\">Binance Research<\/span><\/a><span style=\"font-weight: 400;\">, investment portfolios that include Bitcoin can reach these goals with acceptable risks.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Grayscale Success<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">As of February 19th, the total volume of assets under Grayscale\u2019s management was $3.3 billion.<\/span><\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">02\/19\/20 UPDATE: Net Assets Under Management, Holdings per Share, and Market Price per Share for our Investment Products.<\/p>\n<p>Total AUM: $3.3 billion<a href=\"https:\/\/twitter.com\/search?q=%24BTC&amp;src=ctag&amp;ref_src=twsrc%5Etfw\">$BTC<\/a> <a href=\"https:\/\/twitter.com\/search?q=%24BCH&amp;src=ctag&amp;ref_src=twsrc%5Etfw\">$BCH<\/a> <a href=\"https:\/\/twitter.com\/search?q=%24ETH&amp;src=ctag&amp;ref_src=twsrc%5Etfw\">$ETH<\/a> <a href=\"https:\/\/twitter.com\/search?q=%24ETC&amp;src=ctag&amp;ref_src=twsrc%5Etfw\">$ETC<\/a> <a href=\"https:\/\/twitter.com\/search?q=%24ZEN&amp;src=ctag&amp;ref_src=twsrc%5Etfw\">$ZEN<\/a> <a href=\"https:\/\/twitter.com\/search?q=%24LTC&amp;src=ctag&amp;ref_src=twsrc%5Etfw\">$LTC<\/a> <a href=\"https:\/\/twitter.com\/search?q=%24XLM&amp;src=ctag&amp;ref_src=twsrc%5Etfw\">$XLM<\/a> <a href=\"https:\/\/twitter.com\/search?q=%24XRP&amp;src=ctag&amp;ref_src=twsrc%5Etfw\">$XRP<\/a> <a href=\"https:\/\/twitter.com\/search?q=%24ZEC&amp;src=ctag&amp;ref_src=twsrc%5Etfw\">$ZEC<\/a> <a href=\"https:\/\/t.co\/uCacCOFszh\">pic.twitter.com\/uCacCOFszh<\/a><\/p>\n<p>&mdash; Grayscale (@Grayscale) <a href=\"https:\/\/twitter.com\/Grayscale\/status\/1230245250234535937?ref_src=twsrc%5Etfw\">February 19, 2020<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p><span style=\"font-weight: 400;\">The company\u2019s largest fund Grayscale Bitcoin Trust amounted to $2.95 billion. Considering the price of Bitcoin at that point, it should\u2019ve been managing over 300 000 BTC (1.64% of the entire market supply). The company got to these numbers <\/span><a href=\"https:\/\/www.theblockcrypto.com\/genesis\/55363\/gbtc-now-holds-more-than-285000-bitcoin-1-57-of-all-btc\"><span style=\"font-weight: 400;\">in less than four years<\/span><\/a><span style=\"font-weight: 400;\"> of operation.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A Bitcoin-based fund is the most popular product by Grayscale with 89.29% of all assets under management (AUM). Since only the accredited investors can purchase the funds\u2019 stock directly, this is another point in favor of whales choosing Bitcoin.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to the recent <\/span><a href=\"https:\/\/grayscale.co\/wp-content\/uploads\/2020\/01\/Grayscale-Digital-Asset-Investment-Report-2019-January-2020.pdf\"><span style=\"font-weight: 400;\">report<\/span><\/a><span style=\"font-weight: 400;\">, Grayscale\u2019s client base is:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">71% institutional investors<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">19% accredited investors<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">7% retirement accounts<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">3% family offices.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The Block researchers <\/span><a href=\"https:\/\/www.theblockcrypto.com\/genesis\/56408\/grayscales-gbtc-is-the-second-most-active-stock-on-leading-u-s-otc-market-in-2020\"><span style=\"font-weight: 400;\">point out<\/span><\/a><span style=\"font-weight: 400;\"> that the holders of about 1.65% of GBTC (Grayscale Bitcoin Trust Common Stock) are institutional investors with AUM over $100 million.<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignleft\" src=\"https:\/\/forklog.com\/wp-content\/uploads\/inflows-into-grayscale-bitcoin-2.19.20-1031x675-1.png\" alt=\"Inflows into Grayscale Bitcoin Investment Trust\" width=\"1031\" height=\"675\" \/><\/p>\n<p><span style=\"font-size: 10pt;\"><i><span style=\"font-weight: 400;\">Inflows into Grayscale Bitcoin Investment Trust. Source: The Block<\/span><\/i><\/span><\/p>\n<p><span style=\"font-weight: 400;\">Grayscale Bitcoin Trust is one of the few Bitcoin investment options when it comes to 401(k) and IRA. GBTC shares are also popular in the U.S. OTC market.<\/span><\/p>\n<p><img decoding=\"async\" src=\"https:\/\/forklog.com\/wp-content\/uploads\/OTC-Link-ATS.png\" \/><\/p>\n<p><span style=\"font-size: 10pt;\"><i><span style=\"font-weight: 400;\">GBTC is the second-most popular financial product on the OTC Link ATS platform. Source: <\/span><\/i><a href=\"https:\/\/www.otcmarkets.com\/otc-link\/ats-volume\"><i><span style=\"font-weight: 400;\">OTC Link ATS<\/span><\/i><\/a><\/span><\/p>\n<p><span style=\"font-weight: 400;\">Additionally, GBTC is priced higher than the underlying asset.<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignleft\" src=\"https:\/\/forklog.com\/wp-content\/uploads\/Premium-of-GBTC.png\" alt=\"By the middle of February, the prevalence of GBTC's premium to NAV was at 41% (6% increase compared to January\" width=\"1064\" height=\"699\" \/><\/p>\n<p><span style=\"font-size: 10pt;\"><i><span style=\"font-weight: 400;\">By the middle of February, the prevalence of GBTC&#8217;s premium to NAV was at 41% (6% increase compared to January. Source: Bloomberg<\/span><\/i><\/span><\/p>\n<p><span style=\"font-weight: 400;\">Investors are paying more for GBTC stock than they could\u2019ve paid when buying Bitcoin directly. Therefore, large players are much more sympathetic to traditional assets. It suggests that the integration between the traditional market and the crypto-industry will facilitate greater demand for Bitcoin, which serves as the underlying asset for securities.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Regulated Bitcoin Futures on Bakkt and CME<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Bakkt is gaining momentum. The open interest of the platform reached its peak of $12 million in January 2020. The average trading volume for the month reached $26.45 million, gaining 22% since December 2019.<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignleft\" src=\"https:\/\/forklog.com\/wp-content\/uploads\/Daily-volume-and-open-interest-of-CME.jpg\" alt=\"Daily volume and open interest of CME Bitcoin futures\" width=\"1600\" height=\"905\" \/><\/p>\n<p><span style=\"font-size: 10pt;\"><i><span style=\"font-weight: 400;\">Daily volume and open interest of CME Bitcoin futures. Source: <\/span><\/i><a href=\"https:\/\/www.theblockcrypto.com\/genesis\/55538\/january-by-the-numbers-crypto-volumes-sentiment\"><i><span style=\"font-weight: 400;\">The Block<\/span><\/i><\/a><\/span><\/p>\n<p><span style=\"font-weight: 400;\">Yet, Baakt is still dwarfed by the CME, whose trading volume is 17 times as high. CME\u2019s average daily volume increased by 144% (from $187.71 million in December to $458 million in January).\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">January was the second-most successful month since the launch of Bitcoin futures on CME.<\/span><\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">January was Bitcoin futures&#39; second best month since their 2017 launch, averaging 10.8K contracts, up 69% from full-year 2019 ADV. <a href=\"https:\/\/t.co\/fv07YKOXUi\">https:\/\/t.co\/fv07YKOXUi<\/a> <a href=\"https:\/\/t.co\/J7PmLGLQml\">pic.twitter.com\/J7PmLGLQml<\/a><\/p>\n<p>&mdash; CME Group (@CMEGroup) <a href=\"https:\/\/twitter.com\/CMEGroup\/status\/1227627639260798979?ref_src=twsrc%5Etfw\">February 12, 2020<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p><span style=\"font-weight: 400;\">In 2019, Bitcoin futures trading volume on CME increased by 69% compared to the previous year.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to <\/span><a href=\"https:\/\/static1.squarespace.com\/static\/5df0fdb6a73a4b1d59c74702\/t\/5e3d45ea78d4b559c05963c4\/1581073903166\/Weekly+update+-+Arcane+Research+%28Week+6%29.pdf\"><span style=\"font-weight: 400;\">Arcane Research<\/span><\/a><span style=\"font-weight: 400;\">, the futures prices are significantly higher than the spot price.<\/span><\/p>\n<p><a href=\"https:\/\/en.wikipedia.org\/wiki\/Contango\"><span style=\"font-weight: 400;\">Contango<\/span><\/a><span style=\"font-weight: 400;\"> and the growing demand for the regulated Bitcoin futures may signify more improving market sentiment and large investors\u2019 confidence in the first cryptocurrency\u2019s future.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Fidelity<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">In 2019, a subsidiary of Fidelity Investments, a financial services corporation managing $7 trillion, <\/span><a href=\"https:\/\/www.dfs.ny.gov\/reports_and_publications\/press_releases\/pr1911191\"><span style=\"font-weight: 400;\">got permission<\/span><\/a><span style=\"font-weight: 400;\"> \u201cto provide a virtual currency custody and execution platform, on which institutional investors and individuals can securely store, purchase, sell, and transfer Bitcoin.\u201d<\/span><\/p>\n<blockquote><p><b><i>\u201cThe custody and trade execution services that we provide are essential building blocks for institutional investors\u2019 continued adoption of digital assets,\u201d <\/i><\/b><i><span style=\"font-weight: 400;\">said Michael O\u2019Reilly, Chief Operating Officer for Fidelity Digital Assets.<\/span><\/i><b>\u00a0<\/b><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">Fidelity is also <\/span><a href=\"https:\/\/www.coindesk.com\/fidelity-digital-assets-to-provide-custody-for-bitcoin-derivatives-yield-fund\"><span style=\"font-weight: 400;\">planning<\/span><\/a><span style=\"font-weight: 400;\"> to provide custody for a Bitcoin derivatives yield fund and <\/span><a href=\"https:\/\/www.coindesk.com\/fidelity-digital-assets-to-provide-custody-for-bitcoin-derivatives-yield-fund\"><span style=\"font-weight: 400;\">intends<\/span><\/a><span style=\"font-weight: 400;\"> to support Ethereum in 2020.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Recently, Fidelity <\/span><a href=\"https:\/\/www.theblockcrypto.com\/linked\/56611\/fidelity-international-invests-14m-in-asian-crypto-exchange-operator\"><span style=\"font-weight: 400;\">invested<\/span><\/a><span style=\"font-weight: 400;\"> $14 million in BC Group, the operator of a crypto-exchange OSL.<\/span><\/p>\n<blockquote><p><b><i>\u201cThe placement is further evidence that major institutional investors are entering the digital asset space. It reinforces what we believe at BC Group and OSL; mainstream adoption is inevitable and leading financial firms are making investments in companies that are committed to institutional-quality infrastructure, compliance, and regulatory standards,\u201d <\/i><\/b><i><span style=\"font-weight: 400;\">said Steve Zhang, CFO of BC Group.<\/span><\/i><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">OSL is a crypto-exchange aimed at large players. It provides SAAS, as well as broker and custodial services.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Many financial companies that are interested in cryptocurrencies are creating and investing in platforms aimed at their kin. Custody is often the prioritized element.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Indeed, the greatest attention is given to Bitcoin, while popular altcoins like Ethereum are only being researched by institutional players.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Forecasts<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Vision Hill analysts <\/span><a href=\"https:\/\/www.coindesk.com\/institutional-investment-in-crypto-top-10-takeaways-of-2019\"><span style=\"font-weight: 400;\">anticipate<\/span><\/a><span style=\"font-weight: 400;\"> the year 2020 to be one of the brightest years in the history of crypto. Still, they stress that the forecast has nothing to do with the market prices of assets.<\/span><\/p>\n<blockquote><p><b><i>\u201cIf we exclusively measured the health of the industry from a fundamental progress perspective, by various accounts and measures we should have been in a raging bull market for the last two years, and that has not been the case. Rather, we expect 2020 to be a year of accelerated industry maturation,\u201d <\/i><\/b><i><span style=\"font-weight: 400;\">the analysts noted.<\/span><\/i><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">Large players\u2019 investments in the crypto-industry are growing, but they are still just a fraction of a huge investment portfolio. Cryptocurrencies remain the new asset class, in which many players see unacceptable risks.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Yet, the industry keeps on growing and developing, the uncertainty dissipates, and the perspectives are getting clearer.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to Fidelity\u2019s <\/span><a href=\"https:\/\/www.businesswire.com\/news\/home\/20190502005144\/en\/New-Research-Fidelity%C2%AE-Finds-Institutional-Investments-Digital\"><span style=\"font-weight: 400;\">survey<\/span><\/a><span style=\"font-weight: 400;\">, 47% of the institutional players among the respondents have an \u201coverwhelmingly favorable\u201d opinion about cryptocurrencies. The survey also concluded that \u201cinstitutional investors are finding appeal in digital assets and many are looking to invest more in digital assets over the next five years.\u201d\u00a0<\/span><\/p>\n<blockquote><p><b><i>&#8220;I do see more family offices looking to buy bitcoin for the longer term,&#8221; <\/i><\/b><i><span style=\"font-weight: 400;\">a famous trader and analyst Tone Vays <\/span><\/i><a href=\"https:\/\/cryptonews.com\/exclusives\/crypto-2020-institutions-to-pick-bitcoin-retail-to-stay-in-a-5136.htm\"><i><span style=\"font-weight: 400;\">told<\/span><\/i><\/a><i><span style=\"font-weight: 400;\"> Crypto News.<\/span><\/i><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">He also mentioned that Bitcoin will remain the currency of choice for the institutional players.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Therefore, if the whales continue to associate the entire cryptocurrency market with just Bitcoin, its market share will keep growing. Given the limited supply, the halving-induced inflation decline, and the same or greater demand, the price will go up. This is the demand law that doesn&#8217;t depend on the people\u2019s sentiment.<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">Written by Alexander Kondratiuk<\/span><\/i><\/p>\n<p><b>Follow us on<\/b> <a href=\"https:\/\/twitter.com\/forklogmedia\"><b>Twitter<\/b><\/a><b> and <\/b><a href=\"https:\/\/www.facebook.com\/forklogmedia\"><b>Facebook<\/b><\/a><b> and join our <\/b><a href=\"https:\/\/t.me\/forklogmedia\"><b>Telegram channel<\/b><\/a><b> to know what\u2019s up with crypto and why it\u2019s important.<\/b><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Many crypto-enthusiasts anticipate the advent of large investors to make Bitcoin price grow rapidly and pull the whole market along with it. Galaxy Digital\u2019s Mike Novogratz believes that Bitcoin will soon pass the $20,000 mark, chiefly driven by the regulated exchanges aimed at professional market participants.<\/p>\n","protected":false},"author":6,"featured_media":8273,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"","cryptorium_level":"","_short_excerpt_text":"","creation_source":"human_written","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[3],"tags":[140,18,30,52],"class_list":["post-8271","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-adoption","tag-bitcoin","tag-cryptocurrency","tag-investments"],"aioseo_notices":[],"amp_enabled":true,"views":"573","promo_type":"1","layout_type":"","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/8271","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=8271"}],"version-history":[{"count":5,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/8271\/revisions"}],"predecessor-version":[{"id":8278,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/8271\/revisions\/8278"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/8273"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=8271"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=8271"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=8271"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}