Although institutional investors were initially wary of getting into the Crypto space, 2018 was one of the best years as various high profile figures took a seat at the table. Their increased role in the market could have played a vital role in supporting the virtual currencies and even distorting the market.
Last year, Bloomberg reported that Rockefeller family and George Soros were planning to join the Crypto market. According to the website, the Soros Fund Management was planning to start trading virtual currencies. The Rockefeller family, on the other hand, decided to partner with Coinfund to work with businesses planning to turn to the blockchain.
Will Institutional Investors Drive Crypto Growth In 2019?
Previously, the lack of regulation and volatility have been deterring institutional investors from joining the Crypto sector. However, we are in 2019 and it appears that most of these challenges are no longer an issue. Different jurisdictions are coming up with laws that are making it easy for investors to join the sector.
It’s still early to say with certainty how the institutional investors will affect the Crypto market this year. However, according to Galaxy Investment Partners CEO Mike Novogratz, more investors may get into the sector in the first and second quarter of 2019. He is optimistic that their contribution will help in turning the Crypto markets bullish again.
How Institutional Investors Shaped The Crypto Sector In 2018
According to the co-founder of Persona, a digital management system Stefan Neagu, many institutional investors were attracted to Bitcoin in 2018. The move helped in making BTC an investment instrument. Last year also saw a large number of institutional investors turn to over-the-counter (OTC) market makers. Some of the companies that opened OTC platforms in the same period include Hodl Hodl, Coinbase, and Etoro.
Diar, a Cryptocurrency research group observed that the activities of institutional investors on traditional exchanges have been reducing. This is because BTC has been welcomed into major outfits enabling the investors to shift to OTC trading. An increase in BTC trading volume has been observed during OTC market hours.
New Crypto Rules In Hong Kong Good For Institutional Investors
In Hong Kong, the new regulations by the financial regulator favor institutional investors. The new rules by the Securities and Futures Commission (SFC) limit digital asset trading to institutional investors. The regulator is determined to ensure only qualified institutional investors are allowed to get into the Crypto sector. The new rules require licensed portfolio managers and funds wishing to put over 10 percent of their portfolios in Cryptocurrencies to get a license from the regulator.
According to Roger Lim from NEO Global Capital (NGC), a Singapore-based company, there’s still a lot to be done in terms of Crypto regulation in East Asia. However, he is of the opinion that further regulation will be crucial in boosting the mainstream adoption of the virtual currencies. He adds that the market will mature due to the increased regulation and participation of institutional investors and high net worth individuals.