This year was quite challenging for the crypto market. Bitcoin went from near $20K in mid-December last year all the way below $3,500 this year. In fact, other cryptocurrencies were also affected. It wasn’t surprising to see critics of the crypto market rejoice. Nouriel Roubini, the economist who was able to predict the 2008 financial crisis even mentioned that the crypto market’s bubble already busted.
After the Bitcoin Cash hard fork, Bitcoin started to drop from around $6,200 to $6,500 level. Many thought for months that Bitcoin has found its stability in this level. But after the initial drop, investors panicked and minimized their losses. Now, combined with regulatory action by the Securities and Exchange Commission, Bitcoin slumped below $3,500 for the first time since September 2017.
Minimize Losses or Buy Some More?
Is it time to minimize losses? If you don’t have the stomach for losses, then maybe it is a good idea to exit considering the fact that no one exactly knows when is the bottom going to happen. However, for Greyscale Bitcoin Investment Trust, it now holds over 200,000 BTC for institutional investor clients. Considering the fact that there are 17.4 million BTC in circulation, this means that the company now has control of 1% of Bitcoin in circulation.
And not only are they looking to take advantage of the lower price of Bitcoin, the company is also looking to stay ahead of the institutional Bitcoin investment niche.
For Greyscale, the company earns 2 percent annual fee on investor holdings. It does make sense that the company is looking to accumulate more Bitcoin despite the bearish market. Another reason for Greyscale to double-down on their investment is because the company trades at a premium. This means that it charges 22% premium on Bitcoin above the current Bitcoin market price.
Institutional Investors on The Move?
Many believe that institutional investors hold key to the possibility that the crypto market is going to recover soon. But how true is this? Are they even going to enter the crypto market any time soon? The Securities and Exchange Commission is still currently doing a lot of work in order to fix the current state of the crypto market. It has targeted celebrities and companies that have been promoting and selling unregistered securities.
If you will look at Fidelity Investments and NASDAQ Ventures, both invested big time on a new crypto exchange ErisX. They were able to raise a total of $27.5 million. Thomas Chippas who is the CEO of ErisX mentioned that the investment will be used in order to “build out our infrastructure and secure the appropriate steps are taken to develop a regulated market for digital assets”.
This makes sense for Fidelity to invest in a crypto exchange. It was reported before that Fidelity wants to focus on providing Bitcoin custody solution.
Considering the bearish market, these reports can be surprising. Does it mean that we are expecting institutional investors to get involved soon enough that can even trigger a bull run? For Galaxy Digital founder Mike Novogratz, he believes that by 2019 or 2020, we will be seeing institutional investors get involved.