The crypto market is continuing to consolidate. Considering the typical volatility in this sector, we’ve had a pretty calm last six weeks or so.
To me, this feels more like a bottom than a continuation of the correction. People aren’t wildly bullish, which is a good thing.
Famed hedge fund trader and crypto investor Mike Novogratz recently walked back his prediction that bitcoin would hit $25,000 by the end of the year.
I’m confident the market will rebound and see new all-time highs. But 2019 looks like the more likely time frame for that to happen.
Let’s remember that we do have some big potential catalysts on the horizon.
Bakkt launches in November. This new regulated, industrial-strength crypto trading platform will bring serious legitimacy to the market. Bakkt is the type of institution we need to get the big money firms involved in this industry.
Let’s also review the recent news from BitGo, which manages billions of dollars‘ worth of crypto for large investors. Last month, BitGo received approval from South Dakota state regulators to become a “qualified custodian for digital assets.”
Here’s an excerpt about the BitGo news from Bitcoin Magazine (emphasis mine):
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The approval means the BitGo Trust Company can now offer secure storage for digital assets “designed for institutional customers,” Chief Compliance Officer Shahla Ali told Bitcoin Magazine. “Built on BitGo’s multisignature security, BitGo Custody delivers modern security for modern assets,” Ali continued.
Ali went on to explain that “BitGo has been working on its application for its charter to be a qualified custodian for the past year.” Per South Dakota regulations, the company won’t begin storing assets under the Trust until a 30-day period has elapsed. |
BitGo is a beast. According to Coindesk, BitGo manages $15 billion in monthly crypto transactions. It has single wallets with more than $1 billion of crypto in them. It has been doing this for years, and it has a solid security track record.
Meanwhile, Coinbase is busy building out its institutional sales team in New York. Here’s an excerpt from a recent CoinDesk article (emphasis mine):
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The crypto industry unicorn Coinbase has aggressive growth plans for its newly opened New York office, which caters to institutional clients.
The digital asset exchange plans to expand the operation to 150 employees next year, from 20 currently. According to the company, the slump in cryptocurrency prices this year has not quelled institutional demand for this asset class. “When we saw the market begin to correct, which we all expected, institutions didn’t lose interest,” Adam White, general manager of Coinbase Institutional, told CoinDesk. “It was exactly the opposite.” |
These companies are all going after the biggest money managers in the world and offering them insured, regulated and qualified solutions. And they’re hiring world-class teams to do it (many of the new hires are coming from executive positions on Wall Street).
SFOX, a new cryptocurrency liquidity solution for institutional investors, recently had a large $23 million fundraising round. Among its backers are noted venture capital firms and the co-founder of Airbnb.
Bitwise, the leading provider of crypto index funds (to institutional clients only, for now), recently raised money from Wall Street legend Ric Edelman, whose firm has $22 billion under management.
Here’s a quick quote from an article about Bitwise and Edelman’s investment in it:
| Bitwise co-founder and CEO Hunter Horsley told WealthManagement.com Edelman is “heavily” invested in both the asset management business and its fund, and will educate and support financial advisors interested in exposure to the new asset class in client portfolios. Bitwise recently surveyed more than 450 financial advisors and found that 83% had received questions from clients about crypto assets. |
The infrastructure to support an institutional move into crypto will be in place very soon. Much of it already is.
As you know, I believe bitcoin will be the primary beneficiary of this early money coming in. However, these are savvy investors, and they will quickly seek out promising altcoins. I suspect the infrastructure companies will quickly add select new coins to meet investor demand.
The assets in our portfolio all have the potential to be multibillion-dollar coins. There’s even a chance one of them will eventually rise up to overtake bitcoin.
Keep hodling. Our investment thesis remains intact and is making good progress. On top of all the institutional news, the world’s fiat systems continue to struggle. Ultimately, I believe chaos in the old monetary world will continue to benefit crypto.
That’s it for this week. I’ll have a new recommendation for you next week.
Have a great weekend, everyone.
Adam