institutional adoption

VanEck Makes the Case for Institutional Bitcoin Investment

VanEck has outlined the case for institutional Bitcoin (BTC) investment in a report published on Jan. 29. According to the investment management firm, even a small amount of BTC allocation could improve a portfolio’s upside.

As shown in the report, Bitcoin has a history of outperforming tradition asset classes as well as a track record of strong growth over longer three to five year periods. Bitcoin also enhances the diversity of a portfolio as its movements bear very little correlation to the broad market equity indices, bonds and gold.

Source: VanEck – The Investment Case for Bitcoin

As shown in the chart below, the report finds, “A small allocation to Bitcoin significantly enhanced the cumulative return of a 60% equity and 40% bonds portfolio allocation mix while only minimally impacting its volatility.”

Source: VanEck – The Investment Case for Bitcoin

Despite the evidence presented, VanEck’s report explains that the main deterrent for institutional adoption Bitcoin revolves around the lack of infrastructure to connect it to capital markets and its nature as a bearer asset.

VanEck explains that BTC is not quite a currency but still has the potential to become one. The report also suggests Bitcoin bears the necessary features that could see it become a digital gold, but its future monetary value hinges heavily on how people’s perceptions of its value develop.

BTC Exchange Traded Funds

The report highlighted the crypto industries momentum being carried into 2020, citing regulatory achievements in Colorado and Wyoming and the launch of physically settled BTC futures.

The reports also mention the Exchange Traded Funds(ETF)s that are under consideration and mention that the previously withdrawn VanEck-SolidX proposal is back in the race and slated to be reviewed next.

One BTC Exchange Traded Fund that we will not see in 2020, or anytime soon, is the highly anticipated Bitwise ETF.

On Jan. 14, Bitwise submitted a note to the US Securities and Exchange Commission (SEC) requesting the registration withdrawal. The cryptocurrency asset management firm cited the move as being consistent with “public interest” and “protection of investors.”

According to an article by The Block, Matt Hougan, Global Head of Research, Bitwise confirmed, “We did indeed withdraw the application. This is a procedural step, and we intend to refile our application at the appropriate time.”

Upon its initial filing, Bitwise received a 112-page response from the SEC and Hougan added that the firm is currently working this document but remains committed to the development of the Bitcoin ETF.

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BlackRock Gets Exposure to Bitcoin Through MicroStrategy, Both Firms U-Turn on Shaming Crypto

Investment giant BlackRock, the biggest stakeholder of MicroStrategy — has now indirect exposure to Bitcoin as the world’s largest intelligence company has recently purchased 21,454 Bitcoins.

Although Bitcoin’s price did not seem affected by the recent news of MicroStrategy’s new capital allocation of investing $250 million in Bitcoin (BTC), the majority of crypto analysts and Bitcoin bulls have beliefs that Bitcoin is currently in its early stages of a coming bull market.

MicroStrategy CEO Michael J. Saylor believes that Bitcoin is digital gold, and it is “harder, stronger, faster, and smarter than any money that has preceded it.” However, 7 years ago, he made a drastically different comment on Bitcoin. He tweeted:

“#Bitcoin days are numbered. It seems like just a matter of time before it suffers the same fate as online gambling.”

Today, Saylor finds Bitcoin to be persuasive and the cryptocurrency shows “evidence of its superiority as an asset class for those seeking a long-term store of value.”

MicroStrategy’s bet on Bitcoin has acted as a sign of massive institutional adoption in cryptocurrencies yet to come. In addition to the billion-dollar company’s purchase in Bitcoin; according to data from CNN Business, BlackRock Fund Advisors currently has a 15.24% stake in MicroStrategy, followed by the Vanguard Group, which holds an 11.72% stake.

Just over a year ago, Blackrock’s asset managers said cryptocurrencies are not for everyone, and they’re only suitable for those who can “stomach potential complete losses.” Richard Turnill, BlackRock’s global chief investment strategist said:

“We see cryptocurrencies potentially becoming more widely used in the future as the markets mature. Yet for now, we believe they should only be considered by those who can stomach potentially complete losses.”

Turnill stated that the extreme price volatility seen among cryptocurrencies was the reason for his warning and that the extreme price volatility observed in the US stock markets during financial crises looked “placid” compared to crypto’s volatility.

The institutional barrier to adopting crypto

Blockchain.News previously spoke to Christine Sandler, the Head of Sales and Marketing at Fidelity Digital Assets, who believes that the crypto industry needed to appeal to more traditional institutions and to begin the mitigate the frictions that were present.

During late 2019 to early 2020, Fidelity Digital Assets surveyed 774 institutional investors across the United States and Europe and found that 80 percent of the participants found something of value in digital assets. 60 percent of the participants said that they would incorporate digital assets into their investment portfolios. 90 percent of the survey respondents were traditional institutional investors.

The infrastructure remains nascent in digital assets, where market centers, including exchanges and liquidity providers, are not very centralized. The lack of construct and market data may lead to concern regarding market manipulation.

Cboe Digital Set to Launch Bitcoin and Ether Futures Trading in January 2024

Cboe Global Markets, Inc. has announced a groundbreaking development in cryptocurrency trading, according to Prnewswire. Beginning January 11, 2024, Cboe Digital will launch margin futures trading for Bitcoin and Ether. This initiative positions Cboe Digital as the first U.S.-regulated crypto native exchange and clearinghouse to offer both spot and leveraged derivatives trading on a single platform, representing a significant advancement in the integration of cryptocurrency into the broader financial market.

The introduction of margin futures trading by Cboe Digital is a strategic move that combines the robustness of traditional financial market infrastructure with the burgeoning field of digital assets. This approach allows traders to engage in futures trading without the need to post full collateral upfront, thus offering greater capital efficiency compared to traditional non-margined futures trading. This margin model not only enhances capital efficiency but also marks an evolutionary step in crypto trading, catering to both institutional and individual investors.

The launch is backed by a coalition of 11 leading firms from both the cryptocurrency and traditional financial sectors, including B2C2, BlockFills, CQG, Cumberland DRW, Jump Trading Group, Marex, StoneX Financial, Talos, tastytrade, Trading Technologies, and Wedbush. These partnerships reflect a strong industry support and a shared vision for advancing secure and transparent trading in digital assets.

John Palmer, President of Cboe Digital, emphasized the milestone this launch represents in building trusted and transparent crypto markets. He highlighted the importance of derivatives in providing liquidity and hedging opportunities in the crypto space. Supporting voices from the industry, including Nicola White of B2C2 and Chris Zuehlke of Cumberland DRW, also stressed the role of Cboe Digital’s initiative in enhancing institutional adoption of cryptocurrencies and maturing the crypto asset class.

Cboe Digital’s expansion into Bitcoin and Ether futures trading complements its existing offerings in the spot crypto market, including Bitcoin, Bitcoin Cash, Ether, Litecoin, and USDC. The platform will provide detailed margin requirements and risk management tools on its website, ensuring a comprehensive and transparent trading experience.

Cboe Global Markets is renowned for delivering market infrastructure and tradable products across multiple asset classes, including equities, derivatives, FX, and digital assets. Cboe Digital operates in compliance with regulatory standards set by the CFTC and is licensed by the New York State Department of Financial Services. Looking ahead, Cboe Digital is exploring expansion into physically delivered products, contingent on regulatory approvals, signaling its commitment to innovation and growth in the digital asset space.

Cboe Digital’s launch of Bitcoin and Ether margin futures is a landmark event that bridges the gap between traditional finance and the evolving world of digital assets. This initiative is set to enhance trading efficiency, liquidity, and accessibility in the cryptocurrency market, marking a new chapter in the integration of digital currencies into the global financial ecosystem.

Bitcoin's Road to $1.5 Million: Cathie Wood's Bold 2030 Prediction

In a recent interview with CNBC, Cathie Wood, the CEO of Ark Invest, projected a significant rise in the value of Bitcoin by 2030. According to her forecast, Bitcoin could reach approximately $600,000 under base scenarios. More optimistically, considering factors such as a potential bull market and the possibility of the U.S. Securities and Exchange Commission (SEC) approval, she expanded her projections to an ambitious level of $1.5 million.

The Rationale Behind the Prediction

Wood’s prediction is underpinned by several factors. She cites increasing institutional acceptance and Bitcoin’s finite supply and decentralized nature as key drivers. Bitcoin, often referred to as “digital gold,” is increasingly seen as a hedge against inflation and economic uncertainties, contributing to its appeal for investors. Wood remains optimistic about Bitcoin overcoming regulatory challenges, anticipating a more supportive environment as the regulatory landscape evolves.

Institutional Adoption and Market Dynamics

Bitcoin’s attractiveness as an investment option is further bolstered by the growing interest from both institutional and retail investors. Wood underscores the cryptocurrency’s inflation hedging capabilities and utility in remittances as central to its rising value. Historically, Bitcoin has functioned more as a speculative asset than a common currency, but this perspective is changing with increased adoption and recognition.

SEC and Crypto Regulation

The SEC’s role in the cryptocurrency market cannot be understated. With ongoing regulatory actions and lawsuits, such as the case against Ripple, the regulatory landscape is poised to have a significant impact on the market. Market analysts suggest that approval for spot Bitcoin ETFs could positively influence Bitcoin’s price by boosting investor confidence through regulatory clarity. Such developments could pave the way for Bitcoin’s rise as projected by Wood.

Bitcoin’s Current Market Position

As of now, Bitcoin is a leader in the digital currency market, valued at around $42,375. Its market trend appears to be bullish above the $41,735 mark, with resistance levels noted at $42,885, $44,738, and $46,020. Support levels are at $40,700, $39,775, and $38,350. The Relative Strength Index (RSI) reflects a neutral market stance, and the 50-Day Exponential Moving Average (EMA) is in close proximity to Bitcoin’s price, suggesting a possibility of short-term bullish movement

Pantera Capital: Crypto Market Turns Bullish Amid Regulatory Clarity

Market Resilience Emerges from Trials

In an analysis dated February 20, 2024, Pantera Capital reflected on the cryptocurrency market’s resilience following a period marked by unprecedented challenges. The firm, led by CEO Dan Morehead, highlighted a significant shift from a tumultuous phase characterized by “rare, crazy bad things” to a climate with an “absence of bad things,” which is now fostering market recovery. The year 2022 was particularly brutal for investors, with U.S. bond markets experiencing their worst year and IPO proceeds plummeting by 95% from the preceding year, as per the analysis by Edward McQuarrie.

Bitcoin’s Potential Beyond Perception

Shifting the focus to Bitcoin, the letter underscored the cryptocurrency’s overlooked potential for programmability and its capability to foster decentralized finance (DeFi) and non-fungible tokens (NFTs). With a market capitalization 60% larger than Visa’s and daily trading volumes 250% more than Apple’s, Bitcoin’s global influence is undeniable. Despite this, traditional financial institutions have largely neglected Bitcoin’s technological aspects for a decade. The Pantera team posits that Bitcoin’s “digital Fort Knox” status and its vast computational power backstop could lead to a foundational role in a DeFi system that currently remains untapped.

Institutional Adoption and Positive Regulation

Pantera’s letter noted increased institutional adoption, further propelled by regulatory clarity and the approval of a spot bitcoin ETF earlier in the year. The report also alluded to favorable rulings in high-profile cases, such as Ripple’s XRP not being classified as a security and Grayscale’s victory against the SEC over its Bitcoin ETF application. These developments are seen as harbingers of a regulatory environment that is becoming more conducive to innovation within the United States.

Technological Advancements and Market Outlook

The discussion also touched on the technological advancements within the blockchain ecosystem, particularly the growth of Ethereum layer 2s and hyperscale blockchains. Pantera anticipates these developments to be the “dial-up” to “broadband” moment for blockchain, potentially catalyzing a wave of new applications and use cases. Looking ahead, the firm positions the upcoming Bitcoin halving in late April 2024 as a potential catalyst for a strong bull market, aligning with historical patterns of increased demand and reduced new bitcoin supply impacting prices.