Who controls the power of the encryption market? Retail investors or institutional investors?

Foreword: This article believes that in order for a truly large-scale institutional investor to enter the market, it needs to rely on the interest of retail investors to trigger. While hedge funds, family funds and endowments have already been partially entered, institutions that truly manage large-scale funds are still waiting to see, and they are waiting for the interest of their institutional clients. Only retail retailers are interested in triggering large institutions to enter. The author of this article is Tomorrowland, translated by the blue fox note "Sien".

Pixar has a movie called "A Bug's Life," which is a very underrated movie. One of the scenes is that Hopper uses seeds to punch cards for the brothers he loves to complain about. Then another seed, this is nothing. Then, it opened the large granary of the seed and then it smashed. (Blue Fox notes translation: "A Bug's Life" Chinese film translated as "bug crisis.")

The problem is that Hopper's successful size does not necessarily have the same amount of power. This lies in the seed, which I mean by the power of the masses. Scale is better than influence.

We hear too much information about "institutional influence" in the encryption market, and it's easy to fall into this trap of thinking: organizations can decide when the next bull market will start. At the beginning of 2018, the “institutional funding wall” that everyone was looking forward to was expected to push the price of bitcoin and other assets to the “moon”, while savvy retail investors would follow this happy journey.

"A year later, we are still thinking about this."

A year later, we no longer talk about the “wall of funds”, but instead focus on infrastructure construction and wait for large existing institutions to announce their loyalty. Now, we are repeatedly told that "When Goldman Sachs / State Street / BNY began to provide encryption services," the organization will flock in.

Narrowing the gap

The thing is this: “Institutions” are not independent entities. They are not operating in an independent micro-world, they are with other economies. Most people hold retail funds: Most of the institutional assets under management are held by pension funds, mutual funds, and insurance companies. Without some assurances that their customers agree, they will not make an investment decision.

Yes, there will be exceptions. Hedge funds, family offices, and endowment foundations cater to different supporters. They may take on more risks, usually have a more innovative foundation, and do not obey the same rules and restrictions. However, despite their considerable size, they still account for only a small percentage of global wealth.

And, they have invested in encrypted assets to varying degrees. A survey conducted by Fidelity Investments and the Greenwich Association in early June showed that more than 20% of institutional investors have had some involvement. Another survey released by Global Custodian and BitGo in May showed that 94% of endowment funds have invested in this asset class. A few weeks ago, the Q1 report released by Grayscale Investment showed that the participation rate of the family office has risen sharply.

However, a large amount of institutional funding is still waiting, and not waiting for announcements from Goldman Sachs or its peers (although this will not harm industry confidence), or even waiting for the clarity of regulation (although this is good news.)

They are waiting for the interest of retail investors in the mainstream to start investment.

In place

When customers of pension funds, investment advisers, mutual funds and other institutions begin to ask about encrypted assets, a wider range of institutional investors will compete for news. When the discussion of encryption concepts in various investor communities grows to a number that cannot be ignored, larger intermediaries will introduce new services.

Many smart institutions are at the forefront, positioning them as service providers to meet the interest of intervention. These early leaders are gaining valuable experience and thinking, not to mention income, and are adding professionalism and assurance to new markets.

Despite this, the encryption industry is still far from the "mainstream." For people in our industry, the influx of new infrastructure over the past year has raised awareness, interest in all industries is growing strongly, and regulators have been busy.

However, the encryption industry, from the outside, is still very niche – the overall market value of encrypted assets is negligible compared to other investable assets, and for many people, buying encrypted assets is too complicated.

Encrypted assets are still considered risky. Fraud and hacking still undermine its reputation, and it is difficult to secure a strong banking partnership with the encryption business, and the tax situation in most jurisdictions is confusing.


Looking at the latest headlines, things are changing.

TD Ameritrade, one of the world's largest retail brokers, is planning to offer encrypted asset transactions to its nearly 12 million customers through the institutional exchange ErisX. Earlier in June, Executive Vice President Steve Quirk described the interest of “not looking at charts” in their cryptographic education series. According to the report, online retail broker eTrade also plans to offer encrypted asset transactions to its nearly 5 million customers.

The stock trading app Robinhood (proclaimed a 6 million retail user account) announced the launch of an encrypted asset transaction with the approval of the New York Financial Services Department.

The growth of the retail encryption industry audience has outpaced trading opportunities. Encrypted assets and their benefits are being presented to millions of retail investors through a series of media pushes. Last week, CBS's news program "60 minutes" broadcast a piece of Bitcoin.

Earlier this month, asset management firm Grayscale Investment launched an exciting TV commercial that encouraged investors to “give up gold”. Earlier this year, the agency exchange Gemini launched an encrypted advertisement to post on buses, taxis, billboards, bus stops, train stations, etc. in major US cities, announcing that the “encrypted world” is no longer Wild West World.

The potential for retail interest seems to be building, but the “turning point” is loud enough for the broader institutional sector to start investing in crypto assets (which in turn encourages other institutional investor participants to come in), and maybe there is still a way to go. . Or it may be nearby.

The tipping point may be something that is as obvious as the Bitcoin ETF, or it may simply be an accumulation of subconscious instructions.

At the same time, those of us who focus on institutional interests need to focus on retail development rather than treating retail and institutional demand pools as independent.

Develop upward

But just as the institutional sector needs retail interest to trigger deeper commitments, the retail sector also needs institutional channels. Without the support and supervision of institutional partners (such as trusted consultants, familiar brokers, mutual fund managers, and pension fund distributors), most retail investors may not be able to cope easily.

Retail investors may need to pay more and more attention to cryptocurrencies – but in order to reach a certain size of interest, they need institutional support.

At the end of the "Bug Crisis" movie, the plump caterpillar Heimlich experienced a pleasant deformation, growing colorful wings, and unfortunately it was too small to withstand its weight. Don't worry, its air teammates have extensive experience with the new infrastructure and they help it soar.


Risk Warning: All articles in Blue Fox Notes do not constitute investment recommendations . Investment is risky . Investment should consider individual risk tolerance . It is recommended to conduct in-depth inspections of the project and carefully make your own investment decisions.