2018 has been a tough one for cryptocurrency investors. In 2017 Bitcoin hit nearly $20,000 but since that all-time high, prices have dropped over 80% or more for most crypto projects. The price bottoming out is only part of the picture. Whether the price is up or down, nations trudge forward with their ideas on how to treat cryptocurrencies and companies are steadily building a path forward as well. Let’s look at two reasons why we will see an increase of institutional investment into cryptocurrency in 2018.
1. Aggressive Expansion by Market Leaders
The biggest exchange in the USA is Coinbase. Coinbase is exploring the addition of several new cryptocurrencies to their exchange for their customers to trade. Stellar Lumens (XLM), 0x (ZRX), Zcash (ZEC), Cardano (ADA) and Basic Attention Token (BAT) should all be added to Coinbase with the plan to add even more assets not too long after. In addition to new tokens, Coinbase Custody was launched this spring to provide digital asset custody for institutions. Lastly, Coinbase will add support for ERC-20 tokens, an improvement that may roll out by the end of the year.
It’s not just Coinbase. Goldman Sachs intends to service crypto assets as well. Primarily by filling a gap in the market seen by institutional investors, Goldman is looking to roll out their own form of custodial services for Cryptocurrencies. Goldman is also pursuing launching a crypto trading desk. Although rumored to be halted, top executives at Goldman have stepped forward to say that GS will indeed be launching a Crypto trading desk.
2. Regulated Crypto ETF’s On The Horizon
Although many ETF’s have been repeatedly rejected, including the Winklevoss brothers’ Bitcoin ETF, there is an unrelenting stream of applications for the USA’s financial regulatory bodies to review and eventually approve. The SEC will review 9 ETFs in the next two months. Although the trend for the SEC to delay approvals to the very last possible moment is commonplace, the sheer volume of attempts and demand from industry leaders like VanEck will likely result in a successful ETF in the relatively near term. A new Bitcoin ETF will provide a gateway for institutional investors to safely purchase crypto assets, while also protecting those institutional investors from safeguarding and holding the assets themselves.
There is a positive outlook in Asia as well. Last June Huobi exchange (Singapore based) announced that they would create their own ETF. In Europe, Flow Traders NV made an announcement that they were expanding their trading products to exchange-traded notes or ETNs. These ETNs are based on Ethereum and Bitcoin and function much like an ETF when it comes to ease of use for institutional investors.
The world is showing a real demand for a regulated Bitcoin ETF and it’s safe to assume that if a crypto ETF is successful, it will be followed by an inflow of institutional investors into the space.
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Author: Thomas Winslet