While a Bitcoin exchange-traded fund (ETF) would certainly open the floodgates to institutional investors hopping on board a cryptoasset accumulation spree, there is already rising interest in the space. However, is the interest genuine?
“Yes, without a doubt,” said Boris Bohrer-Bilowitzki, the head of sales at digital assets custody and portfolio management firm Copper Technologies. “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.”
Per a report by Bitcoin Magazine, “The past year has been undeniably marked by the entrance of professional traders and institutions into cryptocurrency, driven by the potential for value appreciation and portfolio diversification. There’s NASDAQ’s interest in the space, for instance. And numerous attempts at bitcoin-based exchange-traded funds.”
According to Bohrer-Bilowitzki, the time is now for institutional investments in the crypto arena.
“If you’re technologically minded, there has never been a better time to be in finance,” Bohrer-Bilowitzki said. “All the rules are being re-written as people begin to understand the potential of distributed ledger technology (DLT) for any asset class, traditional or digital.”
The hesitance once seen is slowly starting to dissipate as more institutional investors start taking cryptocurrency and other assets more seriously.
“Whereas in the past many investors did not want to be the first to enter this space, we’ve now seen first movers enter the space, and now others are willing to invest in crypto as a diversified, uncorrelated investment,” said Scott Freeman, co-founder and partner of JST Capital. “The market continues to evolve quickly. Clients are more comfortable than they were three months ago and will be more comfortable with investing in digital assets three months from now.”
Asia, in particular, is seeing the most interest in rising institutional investment. China is currently in the works of introducing its own state-backed cryptocurrency offering with the help of major private industry players.
“The Asian market tends to be more driven by retail investors, though we have seen an increase in institutional interest from Hong Kong in particular,” Freeman said. “We see a lot of blockchain innovation still coming out of Silicon Valley but more recently we’ve seen a lot of projects out of Asia gaining traction.”
Will institutional investors in the U.S. follow suit?
“Institutional Investors are eager for more regulatory clarity, particularly in the U.S.,” Freeman said. “Crypto has not been around for very long and there are also some investors who simply want to see crypto assets continue to be adopted and traded.”
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