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Institutional Investors And How They May Change The Crypto Market

Samantha Mitchell

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Institutional Investors And How They May Change The Crypto Market

More institutional investors have been getting into the Crypto sector in the past few months. Bloomberg recently reported that hedge and endowments funds have been buying Cryptos worth millions of dollars through private transactions. This has seen miners go-ahead to offer over-the-counter OTC Crypto sales with some having liquidity desks to support about $250 million to $30 billion in trades.

In the past, institutional investors have cited volatility as the main factor that has kept them away from joining the sector. Nevertheless, with most coins such as Ether and Bitcoin not experiencing drastic price changes recently, more institutional investors have joined the sector with the aim of diversifying their portfolios. But how are the increased activities of the institutional investors in the Crypto sector going to affect the entire industry?

Increase In Crypto Products

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As more funds get pumped into the Crypto sector, entrepreneurs are more likely to come up with new Crypto-investment products. For instance, Goldman Sachs Group has already introduced a Bitcoin trading product. At the beginning of this month, the investment bank made the new Crypto trading platform accessible to some of its customers for testing.

New York Stock Exchange owner Intercontinental Exchange (ICE) has already said that in December, they will introduce their Bitcoin futures product. According to the company, its Digital Asset Warehouse will hold Bitcoins that will back the contracts. This means once the contract expires, actual Bitcoins will exchange hands.

According to GanaEight Coin Ltd Co-CEO Hayato Terai, the current legal changes in the financial sector are helping to bring transparency in the Crypto sector. The G8C token-issuing company executive added that the ICO sector will more likely undergo similar changes in the coming months leading to the introduction of more Crypto products.

The Will Help In Addressing The Market Imbalance

Recently, a large volume of virtual currency purchases has been taking place over the counter to avoid the crashing of the exchanges. There have also been fears among most people that the increased institutional investors’ participation may affect Bitcoin liquidity. However, this has not happened even with the large volume purchases. Most Cryptocurrencies have remained relatively stable in the past few months.

Currently, there are individuals who own large volumes of the Cryptocurrencies giving them the capacity to manipulate and distort Crypto prices. However, with the entrance of more institutions, this will not be a problem in the future. Institutions, unlike individuals, are largely restricted when it comes to market manipulation.

Improved Security In The Crypto Sector

Although Cryptocurrencies have attracted the attention of institutional investors, security remains a major challenge keeping most of them away. Most exchanges are not even KYC compliant posing a serious security risk on the investors. Nevertheless, recently, there has been increased collaboration between institutional investors and the regulators to promote the development of clear of KYC/AML policies in the Crypto sectors.

Institutional investors will provide a new inflow of capital in the Crypto sector. Furthermore, their involvement in the sector will improve the transparency and legitimacy of the entire Crypto industry. Although it may be too early to say with certainty how institutional investors will affect the sector, their desire to get in the Crypto market is a major milestone for the industry.

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