Crypto assets are rising. Bitcoin just surpassed $5,800, and altcoins are doing well too. Most news outlets are reporting that the market is responding to Facebook’s continued development of its own cryptocurrency. The Wall Street Journal just broke the latest details in this ongoing story. Here’s an excerpt from Thursday’s article:
Facebook Inc. is recruiting dozens of financial firms and online merchants to help launch a cryptocurrency-based payments system on the back of its gigantic social network.
The effort, should it succeed, threatens to upend the traditional, lucrative plumbing of e-commerce and would likely be the most mainstream application yet of cryptocurrency. It comes as the social media giant is under intense pressure from regulators, users and shareholders to address privacy shortcomings.
At the heart of the initiative, under way for more than a year and code-named Project Libra, is a digital coin that its users could send to each other and use to make purchases both on Facebook and across the internet, according to people familiar with the matter.
Facebook’s secretive plans for a new payments system involve both investments from traditional financial firms and the potential for users to be rewarded for their activity on the platform.
Facebook may reward regular users of the platform by “paying users fractions of a coin when they view ads, interact with other content or shop on its platform.”
This is a fascinating development. To be honest, I’m not that concerned about “FB coin” competing with traditional cryptocurrencies. I don’t think people will want to invest their hard-earned money into a centralized coin created by Facebook.
But this news does have a legitimizing effect on the industry. Facebook is one of the largest companies in history, and it’s investing a lot of capital to build its own coin. And who knows? Perhaps it’ll allow all cryptocurrencies to be sent and spent on its platform. That would be the smart move.
Fidelity Institutional Investor Survey
Fidelity Digital Assets has released a survey it conducted with more than 400 institutional investors on how these firms view digital assets (cryptocurrencies and tokens). Here’s an excerpt from the press release (emphasis mine).
Institutional investors are finding appeal in digital assets, and many are looking to invest more in digital assets over the next five years, according to new research from Fidelity Investments. According to the survey, about 22% of institutional investors already have some exposure to digital assets, with most investments having been made within the past three years. Four in 10 respondents say they are open to future investments in digital assets over the next five years.
These findings are part of a Fidelity Investments research study to better understand how institutions, advisors and investors think about digital assets both overall, and as part of an investment portfolio. More than 400 U.S. institutional investors were surveyed, including pensions, family offices, crypto and traditional hedge funds, financial advisors, and endowments and foundations.
Almost half of the institutional investors surveyed (47%) view digital assets as having a place in their investment portfolios, but opinions vary on how these investors would prefer to hold digital assets in the future.
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72% prefer to buy investment products that hold digital assets
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57% prefer to buy crypto assets directly
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57% prefer to buy an investment product that holds digital asset companies
This is a fantastic development. It shows that interest from institutional investors did NOT die off during the bull market. They’re just cautiously moving into the space and considering their next move.
I believe Fidelity Digital Assets is almost certainly already moving bitcoin prices higher. The company is still in the very early days and is operating only with a small group of clients. But this is Fidelity… a mega-giant of the financial world. Just a few of its best clients have the potential to move a market like bitcoin in a major way. I think we’re already starting to see the effects.
And once institutional investors start dabbling more in altcoins? Then we could see some really sharp moves higher. I believe that we’ll eventually see an extended period of institutional FOMO (fear of missing out) in crypto assets. If this happens, I expect the next bull run to produce incredible returns like those we saw in 2017, when only retail investors were driving markets higher.
The longer this bullish market continues, the more this institutional FOMO is likely to appear. We’re keeping a close eye on things and will of course keep you apprised of what’s happening.
I believe we’re very well-positioned here. I especially like nano, decred, ravencoin and bitcoin.