"Waiting for institutional investors" has been a battle cry for cryptocurrency believers.
According to data from San Francisco-based Crypto Fund Research, it seems that waiting for cryptocurrency believers will take a while. Nearly 70 hedge funds focused on cryptocurrency have closed this year. These funds are mainly targeted at pensions, family offices and wealthy individuals . Researchers said the number of new funds launched was less than half of 2018.
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This year, the cryptocurrency market has experienced turbulence again, and Bitcoin and other cryptocurrencies have once again experienced fluctuations that disturbed institutional investors. Although well-known investment institutions such as Fidelity Investments and the parent company of the New York Stock Exchange (NYSE) are actively advancing digital asset plans, their potential customer base seems to be rapidly eroding.
According to Nic Carter, co-founder of the Boston crypto market tracking company Coin Metrics:
"This market is definitely driven by retail and will remain so for the foreseeable future."
(Cryptocurrency funds closed in 2019, as of November 30)
At the same time, another product that is expected to attract professional funds-compliant futures-continues to receive a calm response.
Bitcoin futures trading volume on exchanges such as the Chicago Mercantile Exchange (CME) and Bakkt has increased, but is still relatively low. CME said in November last year that the average daily trading volume this year was about 32,500 bitcoins, about 236.8 million US dollars at current prices, and more than 3,500 personal accounts were traded.
Compared to the volume of non-compliant trading platforms, this is just a drop in the ocean. According to Skew.com, some exchanges allow any retail speculator to buy up to 125 times the contract, and the transaction volume exceeds $ 10 billion per day.
This hasn't stopped Fidelity from joining the long-time advocates of cryptocurrencies such as Michael Novogratz and the Winklevoss brothers, and establishing services such as custody storage to give institutional investors more confidence in holding digital assets. Fidelity recently stated that its business growth exceeded internal expectations but did not provide specific details.
Galaxy Investment CEO Novogratz said in a recent interview:
"This is not a scuffle. People are doing their own work. The next wave of investment will come from financial consultants, and there may be endowment funds and small foundations involved."
In November, Galaxy launched two new Bitcoin funds for institutional investors such as high-net-worth individuals.
(The growth rate of cryptocurrency funds in 2019 has decreased, and the data is as of November)
Two pension funds in the Fairfax retirement system have recently increased their investment in the industry. Earlier this year, a donation fund from Harvard University supported cryptocurrency company Blockstack Inc .. A Fidelity survey earlier this year revealed that institutional investment in cryptocurrencies is likely to increase in the next five years.
Regulatory reviews are largely responsible for the hesitation of institutional investors, the government's attempts to stop fraud, and the prevention of companies such as Facebook from gaining too much power. The resulting uncertainty, and the inherent volatility of cryptocurrencies (Bitcoin has almost doubled since the beginning of this year, but has fallen by more than 40% since peaking in June) may continue to discourage many investors .
Blockchain Capital partner Spencer Bogart said:
"Take a step back and I think some people will think that the adoption of institutions is disappointing, but of course, this view is entirely dependent on people's expectations. For me, Bitcoin was adopted by institutions only 10 years after its advent It was a huge success, more than anyone imagined three or four years ago. "