Contributed by Adaptive Analysis.
A wave of uncertainty swept over the crypto market last month. Rising interest rates appeared to be one of the key factors causing a Bitcoin price drop of 17% in August. Although retail interest is waning, institutions with the capital to do so are pumping money into the crypto market.
This was exemplified by the establishment of the largest crypto-related fund launch in history last month. Is the movement of institutional money an indication of the true direction of BTC in the long term?
In early August, pioneering American crypto exchange Coinbase secured a deal with the world’s largest asset manager, BlackRock. The agreement was struck in a bid to help Blackrock clients easily handle and trade BTC. BlackRock manages a total of 8.5 trillion dollars, from benchmark funds to customized hedge funds and private equity.
Clients of both companies can use Blackrock’s technology to monitor risk and exposure to bitcoin and other conventional assets. Additionally, BlackRock has introduced a trust product that allows institutional investors access to Bitcoin.
”The Launch of BlackRock’s bitcoin fund is a sign of how far crypto has matured as an asset class” – Sui Chung – Chief Executive Officer – CF Benchmarks
The deal comes at an interesting time for Coinbase, as it faced over $1 billion in losses prior to the partnership. Shares dropped 50% but quickly surged back up by 40% post announcement. They also partnered with Meta this month, who confirmed they’d be rolling out NFTs across 100 countries after integrating with Coinbase’s wallet and dapper. These aren’t the only major companies that made big moves in the crypto market this month.
- Brazil’s largest bank, BTG Pactual launched its own crypto trading platform.
- Samsung announced plans to roll out its own crypto exchange platform.
- CME launched Euro-denominated crypto futures aimed at institutional clients.
The jump in activity is in response to increased demand by institutional investors for accessibility to crypto trading. Funds like Blackrock are building on-ramps to help new institutional investors enter the market.
Patience is a key differentiator between retail and institutional investing. Institutions and savvy investors will look to buy the lows in the bear market and sell the highs in the bull market. Furthermore, Bitcoin is still a nascent asset class that has likely not yet reached full adoption.
Like most markets, money talks louder than any analyst. Where institutions are placing funds is a key indicator as to where an asset class is or will be positioned. It is much more telling to watch where the money is going than to listen to what people are saying. This month has indicated institutions are backing Bitcoin by facilitating large investors’ access to the market.
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