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Binance Report Shows Only 7% Institutional Bitcoin

Binance Report Shows Only 7% Institutional Bitcoin

A study released by global cryptocurrency exchange Binance indicates that only about 7% of Bitcoin in circulation is owned by institutional investors, suggesting that the much anticipated deluge of institutional investment in Bitcoin is yet to come.

The report, published by the exchange’s research arm, Binance Research, shows that there is far more space for growth in institutional investment than most people would assume, given that the amount of institutional money in the crypto market is barely a third of that invested in traditional stock markets. The report shares:

“[the] crypto market’s frequent periods of extreme correlation are inseparable from the market’s highly retail-driven participation… Data shows that whenever correlations between [Bitcoin and altcoins] reach a specific positive upper bound of [0.8 to 1.0], the trend of Bitcoin against USD tends to reverse, or at least halts the previous price action.”

Institutional investment is widely believed to be the much-needed catalyst for a strong and sustained growth in Bitcoin price, and, by extension the cryptocurrency market. This is one of the reasons that regulated derivatives such as the Bitcoin exchange-traded funds (ETF) applications awaiting US Securities and Exchange Commission (SEC) approval are keenly watched by investors.

At the moment, institutional investors would not be able to enter Bitcoin easily, since it can only be bought individually at exchanges at limited amounts. Huge orders expected by institutional money would also destabilize markets, since orderbooks at exchanges are thin in volume. Bitcoin’s recent surge by 10% in a day was an example of how big orders could cause sudden movements in price.

 

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Analysts See 2019 as the Year of Institutional Crypto Investment

A number of investment funds and cryptocurrency firms are lauding 2019 as the year of institutional investor, 24 hrs before its arrival.

Many see large scale investment being re-examined in 2019 after being scared off by Bitcoin’s December dip. Wall Street notably stood back from the brink prior to the end of the year with Goldman Sachs’ much-publicized plans to open a crypto trading desk called “top-of-the-market-hype thinking” by one New York executive.

Nasdaq is already supporting crypto exchanges and the company is certainly not new to cryptocurrency’s underlying technology, blockchain. Apart from its long-term relationship with blockchain startup, Chain, it has recently announced a collaboration with cryptocurrency exchange Gemini.

Downunder, Henrik Andersson, chief investment officer of Apollo Capital Fund is upbeat on the prospect: “During the coming year we will see a gradual adoption from institutions,” he said, adding “We have the first US university endowments investing in funds” referring to major universities’ announcements that they were to invest in cryptocurrencies.

Harvard University, the Massachusetts Institute of Technology (MIT), Stanford University, Dartmouth College, and the University of North Carolina (UNC), have all made investments from their endowments into at least one crypto fund in 2018.

Another Australian, Every Capital’s director Tom Surman believes that the institutional phase has already begun, adding, “Massive retail offerings and institutional investors are probably the only groups that can meaningfully move the needle on the crypto market cap from here on.”

“The fact that David Swensen [Yale’s chief investment officer] put an investment into bitcoin — with his reputation on the line, his endowment on the line — tells you something…Some of the smartest people in the investing world think it’s a store of value,” said Mike Novogratz, who had been talking up the industry for much of 2018.

Around the world, national banking institutions continue to dabble with the crypto adoption, mainly as a step towards side-stepping internal financial complexities caused by sanctions or recession, but most banks are reticent to commit to launching cryptocurrencies of their own.  Most prefer to watch and wait.

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Blockchain to Launch an Institutional Investment Platform

Blockchain has announced that they are launching an institutional investment platform named Blockchain Principal Strategies. The CEO and Co-Founder of Blockchain, Peter Smith, says “We are thrilled to debut Blockchain Principal Strategies, an institutional grade platform customized for institutions, family offices, and individual investors. BPS provides clients the opportunity to invest in digital assets with the same peace of mind and security that has become synonymous with the Blockchain name”.

Luxembourg-based Blockchain is the most widely used Bitcoin wallet service, and also a popular source for Bitcoin network statistics like hash rate and transaction frequency. Blockchain has been a big player in the Bitcoin field since the early days. Having launched in 2011, they have recently expanded into facilitating the buying and selling of Bitcoin, and now they are one of the first cryptocurrency companies to expand into Bitcoin institutional investment.

Blockchain Principal Strategies will offer an over the counter (OTC) trading desk for large cryptocurrency trades. Members of the Blockchain OTC team include people from major institutional investment firms Goldman Sacks, JP Morgan, and UBS, and will combine liquidity from across the cryptocurrency markets for optimal trades.

Additionally, Blockchain Principal Strategies will offer equity investments in cryptocurrency companies as well as early access to reputable initial coin offerings (ICOs). Cryptocurrency market research from the Blockchain research team will be built into the platform to help investors make informed decisions.

According to research by Willis Towers Watson, institutional investment funds control at least USD 131 trillion of assets. If even a small percentage of this is invested into Bitcoin and cryptocurrency it could cause a massive price rally, since the Bitcoin market cap is only USD 108 billion.

Several cryptocurrency experts have been saying that Bitcoin will experience a massive rally as institutional investors jump into the cryptocurrency market and that the creation of fully regulated cryptocurrency custodians has broken down the final barrier for institutional investment.

The launch of an institutional investment platform by Blockchain, one of the most reputable Bitcoin companies in the world, could be a harbinger that a big wave of institutional capital is about to be injected into the cryptocurrency markets. Blockchain says they will be rolling out additional institutional investment products throughout summer 2018.

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