Institutional Investors are Attracted to Cryptocurrency; This is Why

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September 26, 2018 by
Institutional Investors are Attracted to Cryptocurrency; This is Why

The cryptocurrency market in 2018 has not been anywhere close to the climax it had last year. The price of the most valuable cryptocurrency has fallen by almost 70 percent from its all-time high of $20,000.

Experts have reeled out various reasons for the slump in prices. Some say that the market is correcting itself, while others have pointed fingers at the constant rejections of crypto exchanges by regulators. A recent research claimed that prices slumped because previous holders in the market had sold their coins to new and inexperienced investors.

The only certainty is that nobody truly knows how long this current bear market will last. However recent reports like the one revealing that Goldman Sachs is planning to launch a cryptocurrency custodial services have redirected the spotlight to the cryptocurrency market.
In this article, we will be analyzing the reasons institutional investors believe that cryptocurrency is the next big thing.

Introduction of Enhanced Custodial Services

The unavailability of the top of the line custodial services had previously deterred the interests of institutional investors in cryptocurrency. Institutional investors could not risk entering a market that cannot guarantee that its assets are safe and insured. All this is about to change as recent reports suggest that existing and proposed custodial services are extensively being modeled to meet standards.

The first custodial firm to be launched, Kingdom Trust, recently announced that the biggest insurance market Lloyd’s of London will insure its reserves. Coinbase also revealed that it is planning on adding cryptocurrency to its custodial service. As earlier mentioned, Goldman Sachs is also planning on listing crypto assets in its custodial services. These are going to be top of the line services that can guarantee premium insurance and safety for crypto assets.

The Stance of Regulators

U.S. Security and Exchange Commission has rejected several applications for different ETFs this last few months. The good news is that on each rejection order, the commission stated that its decision to reject the applications was not because of any doubts in the viability of bitcoin as an investment. They had rejected the applications because the exchanges were not able to guarantee a system that will prevent frauds.

Therefore, there is every chance that at one point one of the numerous crypto ETFs in the world will be able to get a license from standard regulators. And when that happens, institutional investors will flood the crypto market.

Past Performance of Cryptocurrencies

The unregulated nature of cryptocurrencies has allowed it reach prices that are unattainable by tradition fiat currencies. Last year, bitcoin peaked at $20,000 and the world went crazy. Institutional investors have seen the potential of the crypto market and they are not intending to be on the sidelines when the next bull market comes.

Favorable Cryptocurrency Regulations

Crypto-friendly nations like Gibraltar, Malta, and Switzerland are churning out regulations and frameworks that make business easy for crypto investors. This means that institutional investors can take advantages of this opportunities.

The Emergence Of Credible Crypto Exchanges

Majority of the present and biggest crypto exchanges in the world are new firms. The probability that institutional investors will entrust their money to this start-ups is critically low. However, the emergence of well-known brands in the crypto market will change this. Firms that can attract institutional investors to the crypto market are planning on launching crypto exchanges. Some of which include Goldman Sachs and Nasdaq.

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