Cryptocurrencies .. and a look at the institutional interest that is just starting!

A growing list of major financial entities has continued to increase their exposure to cryptocurrencies over the past year or so.

And many have recently remembered what has become closer to the old saying, about the fact that The cryptocurrency market is not for the faint of heart, when the total market value of the industry fell to a relatively low level of 1.75 trillion dollars in 20 September, to make a strong comeback.

Despite all these volatility, the demand from institutional investors remains strong, with reports indicating that the big money holders have recently continued to buy dip, Especially in the wake of the blanket ban imposed by China, which saw bears dominating the market, albeit for a short period.

For more details on this issue, a report issued by Coins Shares That during the last week of September, digital asset investment products generated value 95 million dollars of inflows for institutional crypto investment products, with Bitcoin (BTC) And Ethereum (ETH) in the foreground, with 50.2 million dollar and 28.9 million dollars of inflows respectively.

The last 30-day period has also seen, on average, an increase in inflows of products Bitcoin, at an enormous rate 234% on a weekly basis.

It should be noted that since April, the US investment bank has doubled Morgan Stanley, the total number of shares Grayscale Bitcoin Trust (GBTC) owned, which emerged when the financial giant submitted a report to US Securities and Exchange Commission (SEC) in a 27 September.

Finally, the company Ark Invest Ark Invest Giant Investment Management, managed by the CEO Cathy Wood She was also in a buying frenzy GBTC The company acquired more than 450 thousand Share GBTC, through two different separate purchases recently, bringing their total to a large volume, which is 8.3 million Share GBTC.

Institutional demand growth

In order to get a better idea of ​​how active institutional players are, in terms of their exposure to cryptocurrency, Cointelegraph With the chief trading officer of the Crypto Options Exchange Platform Deribit، Luuk Strijers.

The official has indicated in Derbet To that big banks like Morgan Stanley And City Citi And Goldman Saxon, has begun offering a wide range of digital assets to its clients, adding:

“We don't see it becoming active on external derivatives platforms yet.

However, we do see second-tier companies, asset managers and hedge funds, are becoming increasingly active either in investing or trading, or alternatively hedging their investments in YOU“.

To support his claims, he pointed out that about 20% of volume options Deribit Nowadays, it is traded as an over-the-counter block, as this number previously hovered around a range 5%- 10%, and explained:

“Given the volume of these transactions, which clearly indicate the participation of institutional parties, these transactions are best executed in a single block, as opposed to multiple on-screen transactions."

Finally, he pointed out Strayers Noting that traditional financial institutions prefer trading futures and options over perpetual offerings, which are usually seen as short-term exposure products, due to the unpredictability of their financing, he said:

"I have Derbit Greater open interest in futures contracts, compared to many of our peers, as about 80% of our volumes are managed institutionally.”

The long game

She said Elena Sinelnikova Co-founder and CEO of Gathering Platform Ethereum Layer-2 Ethereum layer-two Metis, in statements to Cointelegraph More often than not, retail investors ignore consolidation periods and turn their attention to the crypto industry only, when the market is pumping.

Also, institutional investors know that the best time to consolidate is when the market has drifted lower and held flat, indicating a long-term outlook on their part. add:

“We've been through enough market cycles to know that the kind of pullback we've seen over the past few months often comes before a major uptrend.

While no one can predict the future (in cryptocurrency or otherwise), institutions are using this quiet period to pack up In anticipation of another big step."

as indicated Sinelnikova However, investors need to remember that different phases of the market can lead to dramatically different outcomes:

“Dominance data must be monitored Bitcoin, to see if it Bitcoin or alternative currencies altcoins Or both, that drives the next move up in the market.”

While the chief architect of the network shares Tilos , focused on scalability, Douglas Horn, shares a somewhat similar look, and has told Coitnelgraph Institutional investors can be likened to giant tankers, as it takes a lot of time and energy to get them moving, but once they do, it's hard to stop them again, he said:

“Now that they have made the decision to go into cryptocurrency, some temporary volatility will not deter them.

And if anything, they will be less volatile in terms of cryptocurrency accumulation during recessions.

By the time these investors bought the first Bitcoin To them, they had certainly spent years evaluating their incomes, goals, and strategies.

They operate completely differently from ordinary crypto investors and traders.”

On the other hand, he pointed out Horn Horn In the current situation, the foundation stone has already been laid, by companies such as MicroStrategy For others to follow, a flood of new institutional investors are about to finish their lengthy due diligence processes to assess the long-term viability of investing in the digital asset market.

Not everyone agrees

Philip Gunwhy, chief marketing officer of the system NFT، Blockasset, Pending Cointelegraph, that although the embrace Bitcoin He said:

“The potential buyers for bitcoin They do not constitute a coordinated effort by these institutional investors, and as such, one can only know for sure the buying patterns of these investors when they are announced.

while double Morgan Stanley his investments in Bitcoin Recently, many institutional investors are choosing the option of venture capital financing, injecting capital into companies that provide related services Bitcoin“.

Although assurances Gunwhy, He said Wes Levitt, Head of Decentralized Video Streaming Platform Strategy Theta, for Cointelegraph, institutional capital is still flowing into space blockchain, as evidenced by the amount of funding Crypto Venture Capital (VC) In the first half of the year 2021, which exceeded 17 billion dollar. where he said:

'This interest may have diminished somewhat, in direct exposure for bitcoin And Ethereum, with the May crash, alarming many traditional investors.

But according to reports, institutional flows remain positive for September, and as always, reports of cryptocurrency dying are greatly exaggerated.”

looking forward

speaking site Cointelegraph also with Joshua Frank Co-founder and CEO of THETIE, which is a provider of cryptographic analytics and Blockchain To get an idea of ​​where the increased adoption of enterprise crypto might be headed, in his view, the demand his company is seeing from traditional companies has been staggering.

where he said Frank:

“There are dozens, if not hundreds, of multibillion-dollar trading firms, hedge funds and other asset managers who have recently made their first crypto trades.”

He further stated that although there have been some high profile announcements of funds investing in cryptocurrency, there are many such developments happening behind the scenes, and the public is not aware of them.

also added Frank, that usually such operations start simple, as the fund, for example, trades Bitcoin BTC With criticism and pregnancy, on the principle of Proof of Concept, using partner capital, and growing over time, adding:

“We find this money falling more and more often. And we have at least 5-10 Clients represent the largest 50-100 of hedge funds that actively employ crypto teams.

That's all I can say publicly, while these funds are our customers, so we notice them in real time.”

Finally, according to a recent survey, a growing list of traditional financial entities is increasingly looking to move into the world of digital asset trading and investments.

The report also stated that about 62% of global institutional investors, who are not currently exposed to cryptocurrency, are looking to enter the crypto market within the next few months. 12 next, or so.

The survey took into account the opinions of 50 of wealth managers, and50 Corporation invested from various countries, including the United States, the United Kingdom, France, Germany, and the United Arab Emirates. Where the report stated:

“There is no doubt that the crypto-asset market has become more pervasive, in the institutional sector and wealth management.”

As the cryptocurrency industry continues to grow from strength to strength, both from a regulatory and infrastructure point of view, it will be interesting to see how the aforementioned trend of increasing institutional adoption is carried out.