Last year, cryptocurrencies were bullish especially when Bitcoin was able to reach near $20k in 2017. It was the time when people were starting to notice the possibility of earning some quick profits from digital assets. But things went south a few months after. Regulators stepped in, hacking incidents happened, and the promise of regulatory clarity wasn’t happening.
Today, Bitcoin is trading at around $3,800. It is around 80% below its peak last year. But this isn’t even the worst. Ethereum is currently down by 90% while Ripple is down by 91.5%. And just when we thought that Bitcoin and cryptos are even going to recover, the massive bloodbath happened during Christmas day. It happened right after a massive recovery. In just 24 hours, $15 billion was pulled out of the crypto market.
Though top cryptos are down, Bitcoin Cash has bounced back and gained more than 55% after Roger Ver talked about the development of the cryptocurrency’s future.
Institutional Investors Losing Interest?
And the bad news isn’t stopping there for the crypto market. Now, it has been reported that there is a possibility that institutional investors are slowly moving out of the crypto market. For instance, Goldman Sachs was among the first Wall Street players that showed interest in Bitcoin futures. Also, you have the partnership with Galaxy Digital not to mention the $57 million series B investment on BitGo Holding which was a custodian company. All of these moves were anticipatory measures to the possible entry of institutional investors in the market.
However, after a year, Goldman is still not yet offering crypto trading. And also, though it has a Bitcoin derivatives product, it hasn’t progressed much yet.
You also have the likes of Citigroup that developed a crypto-based product that aims to help asset management companies and hedge funds to reduce the risks that they take when investing in the crypto market. This is known as Digital Asset Receipt. For this product, it is meant to allow investors to keep tabs on their investments.
For Daniel H. Gallancy, who is the chief executive officer of SolidX Partners, “The market had unrealistic expectations that Goldman or any of its peers could suddenly start a Bitcoin trading business”. He also added that “That was top-of-the-market-hype thinking”.
Crackdown and Regulatory Clarity
After a year since it caught the attention of regulators, regulatory clarity is still far from happening. On the part of the US Securities and Exchange Commission, the agency cracked down on ICOs and even targeted celebrities who endorsed tokens. And also, there are those lawmakers who are mulling to change the old definition of securities in order to accommodate cryptocurrencies.
Despite the lack of participation on the part of institutional investors, there is a silver lining to all this. For Ben Sebley who is a former Credit Suisse Group AG trader and is now the head of crypto boutique NKB Group, “The more important story is all infrastructure that’s being built now enable institutional trading”. Will there be institutional investors in 2019? Or will the bloodbath continue? Also, it seems that investors are hesitant mainly because they don’t know where the bottom is at this point.