Top 10 Institutional Actors In Crypto For 2021 #GotBitcoin
Slowly but surely, institutional players are moving into the crypto/blockchain neighborhood. Top 10 Institutional Actors In Crypto For 2021 #GotBitcoin
According to a 2021 Fidelity Investments survey, about 22% of institutional investors already have some exposure to digital assets, with most investments having been made within the past three years. Moreover, 4 in 10 respondents say they are open to future investments in digital assets over the next five years.
“Institutional investor involvement in cryptocurrency in 2020 has been primarily about getting the infrastructure in place, such as the opening of Fidelity Digital Assets and Bakkt,” Jonathan Levin, co-founder and chief strategy officer of Chainalysis, told Cointelegraph, adding:
“Now that the infrastructure is in place, we expect institutional volume to come as long as they can get comfortable with the compliance and market risks of cryptocurrency.”
Banks and insurance companies seem to be more engaged than other institutional segments, commented Levin, “but once institutional support from these key sectors are in place, we expect an uptake from investors such as funds and family offices.”
Clearly, there is still work to be done — particularly with regard to compliance — but with that as a preamble, here are our top 10 institutional actors in the last year:
UAE Wealth Fund Mubadala Investing In Crypto Ecosystem: CEO
Mubadala’s CEO tells CNBC he’s not a crypto skeptic pic.twitter.com/rfT5nLjqur
— CNBC Middle East (@CNBCMiddleEast) December 13, 2021
While “many people are skeptics, I do not fall in that category,” said CEO Khaldoon Al Mubarak.
Mubadala Investment Company, one of United Arab Emirates’ sovereign wealth funds, is looking at investments in the “crypto ecosystem,” CEO and Managing Director Khaldoon Al Mubarak said in an interview with CNBC.
* “I think it (crypto) is real. This is a business that had $200 billion worth of value two years ago, and is $2.5 trillion value today and growing. So while many people are skeptics, I do not fall in that category,” Al Mubarak said.
* The evolving regulatory environment will help crypto transition into something new, he added. Mubadala has AED 894 billion (US$243 billion) in assets under management, and is one of the largest wealth funds in UAE and the world.
* The Abu Dhabi-headquartered fund is investing in the ecosystem around crypto, be it blockchain, energy usage, Al Mubarak said, without giving further details.
JPMorgan Chase & Co. (Stablecoin)
In February, J.P. Morgan, the largest bank in the U.S., introduced JPM Coin, claiming to be the first bank to create and test a digital coin representing fiat currency. The goal was to allow instantaneous payments between the bank’s institutional clients on a permissioned blockchain platform.
The stablecoin was to be 1:1 redeemable in a fiat currency (U.S. dollars) held by J.P. Morgan — unlike most stablecoins, like Tether (USDT) and USD Coin (USDC), that claim to have a 1:1 fiat collateral. It was slated to roll out in late 2019, but it had still not launched publicly as of Dec. 10.
J.P. Morgan has been actively exploring blockchain and crypto-related initiatives for several years — notwithstanding the fact that CEO Jamie Dimon once called digital currencies a “fraud.” Its Interbank Information Network, a bank payment and data-sharing network based on J.P. Morgan’s in-house blockchain platform Quorum, implemented in 2018, has some 365 global members today and will expand in 2020 to Japan.
Intercontinental Exchange/Bakkt (Exchange)
A new institution-sized exchange company joined the crypto world in September 2019 when Intercontinental Exchange (ICE), which also owns the New York Stock Exchange, launched Bakkt, the first exchange to offer physically settled Bitcoin (BTC) futures contracts. The Chicago Mercantile Exchange, by comparison, has been settling BTC futures contracts in fiat currency, not Bitcoin, since December 2017.
After a slow start, Bakkt’s Bitcoin futures volume edged higher through 2019 and, on Nov. 27, hit a new all-time high with 5,671 futures contracts traded (volume: $42.5 million).
In early December, Bakkt launched the first regulated Bitcoin options and cash-settled futures in the U.S. The announcement came just a few days after Bakkt CEO Kelly Loeffler was named to fill the U.S. Senate seat of Georgia’s retiring Johnny Isakson (R).
Bakkt To The Senate: How Loeffler Became One of Crypto’s Most Influential
Since the 2017 mania, every year in the crypto and blockchain space has been increasingly eventful. 2019 was no exception: Along with Facebook’s Libra project and China’s digital yuan endeavors, Intercontinental Exchange’s digital assets platform Bakkt was finally launched. Its CEO, Kelly Loeffler, ensured a smooth start for the exchange, then swiftly left her business to pursue a political career by the end of the year.
She now represents the state of Georgia in the United States Senate, and as one of the most influential people affiliated with the crypto industry, she could potentially pave the way for Bitcoin and other cryptocurrencies in Washington.
From an Illinois farm to Atlanta’s highest business circles
Loeffler was born in Bloomington, Illinois on Nov. 27, 1970. She grew up on her family’s farming estate in Stanford, working the soybean fields. “We lived simply,” Loeffler recalled at a recent press conference. “Life revolved around farming, church, school and 4-H.” She allegedly became interested in stock markets as early as the age of 10; her mother kept track of commodity prices on a kitchen napkin every day before lunchtime.
In 1988, Loeffler graduated from Olympia High School, where she partook in various sporting activities — namely cross country, track and basketball (she has since purchased the Atlanta Dream of the Women’s National Basketball Association). Her peers from high school have described her as “very bright and articulate and just kind of a beacon of light in her class.”
In 1992, Loeffler graduated from the University of Illinois with a bachelor’s degree in marketing. She then obtained a master’s in business administration from Chigaco’s DePaul University in 1999.
In 2002, she joined the Intercontinental Exchange, or ICE, after working at Toyota, Citibank, financial firm William Blair, and private equity fund manager The Crossroads Group. Back then, ICE was a two-year-old, Atlanta-based startup with a focus on energy products (crude and refined oil, natural gas, power and emissions), and Loeffler started handling investor relations there. Two years later, she married the firm’s CEO Jeffrey Sprecher, who calls their relationship her biggest risk “because if it didn’t work out, she’d be on the short end of the stick.”
Together, they made ICE what it is today: an operator of 13 major international exchanges that include the world’s largest, the New York Stock Exchange. Currently, ICE’s market cap is estimated at $52.5 billion, while Loeffler and Sprecher live in Atlanta’s most expensive piece of real estate — a mansion spanning 15,000 square feet with a $10.5 million price tag.
Loeffler’s quick but eventful career in crypto
Loeffler’s Views On Crypto Are Elaborate, As She Prefers Technological Breakthrough Over Flashy Numbers:
“Notably, 2018 was the most active year for crypto in its brief ten-year history. This was evidenced by rising investment in distributed ledger technology and digital assets, as well as by blockchain network metrics such as daily bitcoin transaction value and active addresses. Yet, these milestones tend to be overshadowed by the more narrow focus on bitcoin’s price, which has been seen by some, as a proxy for the potential of the technology.”
Thus, in 2018, Loeffler entered the crypto industry by becoming the CEO of Bakkt, a digital assets platform launched by ICE and backed by Microsoft and Starbucks, among other investors. “We are collaborating to build an open platform that helps unlock the transformative potential of digital assets across global markets and commerce,” she declared in Bakkt’s announcement. Bakkt’s trademark feature is physically delivered BTC futures contracts, while BTC futures traded by the Chicago Mercantile Exchange and the Chicago Board Options Exchange are settled in cash.
The platform’s launch was delayed numerous times, and when it finally took off in September 2019, the initial results were lackluster: Despite analysts’ bullish forecasts, just 71 BTC (worth about $700,000 at the time) were traded in the first 24 hours.
Nevertheless, the numbers soon started to pick up the pace. By Oct. 26, the platform traded as many as 1,183 Bitcoin futures contracts — worth roughly $11 million — in a single day.
Bakkt then decided to capitalize on the positive development. On Dec. 9, the platform unveiled two new Bitcoin investment products: Bakkt Bitcoin (USD) Monthly Options and Bakkt Bitcoin (USD) Cash-Settled Futures. According to Bakkt, the monthly options product is the first Bitcoin futures contract regulated by the U.S. Commodity Futures Trading Commission.
Furthermore, Bakkt has teased a consumer app developed in collaboration with Starbucks and aimed at helping consumers “unlock the value of digital assets, as well as ways in which they can transact or track them,” in its quest to integrate crypto into the mainstream.
Still, despite the fruitful start that marked one of the key milestones for crypto last year, Loeffler has left the digital assets platform to pursue a career in Washington, D.C. In December, Georgia Governor Brian Kemp appointed the Bakkt CEO to a seat in the U.S. Senate, replacing Republican Sen. Johnny Isakson, who retired due to health concerns. Loeffler is the second woman in history to represent Georgia in the Senate and now the crypto community’s highest-placed political advocate.
Consequently, Loeffler has stepped down from ICE’s crypto-focused platform. “We are grateful to Kelly for her many contributions to Intercontinental Exchange spanning 17 years and will miss her wisdom and counsel on the executive team and leadership of Bakkt,” an ICE spokesperson said in a press release.
Washington And Potential Conflict Of Interest
Despite leaving Bakkt, Loeffler may continue to participate in the crypto industry’s growth as a lawmaker. Indeed, John Todaro, director of digital currency research at New York-based data provider TradeBlock, previously told Cointelegraph: “Kelly Loeffler obviously understands the space and is a proponent of it, and so, where applicable on matters before her in the Senate, I would imagine she would be a proponent of bitcoin and other digital currency platforms.”
Loeffler started her career in the Senate with a bang, supporting six bills in her first week in office. So far, all her moves have been strictly conservative (Loeffler and her husband have donated a total $3.2 million to political committees, most of which were Republican). As Loeffler put it herself, she is “pro-Second Amendment, pro-military, pro-Wall and pro-Trump.” Ironically, some earlier media reports indicate that Trump is not a fan of Loeffler and preferred to see a different candidate in the U.S. congressional seat.
Most recently, Loeffler has joined the Senate Agriculture Committee, which oversees the CFTC, a regulatory agency with significant oversight of cryptocurrency-based commerce. This sets up a potential conflict of interest, as her husband is still the CEO of ICE, an exchange operator that is “subject to extensive regulation by the Commodity Futures Trading Commission,” as per its annual report.
To that, Loeffler has stated that she would recuse herself “if needed on a case by case basis.” She told The Wall Street Journal, “I have worked hard to comply with both the letter and the spirit of the Senate’s ethics rules and will continue to do so every day.” Loeffler will serve in the role until a special election is held in November 2020, when she will have to win the vote to remain in office. To this end, she plans to spend $20 million of her own funds.
U.S. Commodity Futures Trading Commission
The incoming chairman of U.S. Commodity Futures Trading Commission (CFTC), Heath Tarbert, said in October that Ether (ETH), as well as Bitcoin, are commodities — not securities — and, as such, will be regulated under the Commodity Exchange Act with the CFTC as its primary regulator.
“My guess is that you will see in the near future Ether-related futures contracts and other derivatives potentially traded,” stated Tarbert.
This statement provided regulatory clarity and some relief to Bitcoin and Ethereum developers and investors, present and future. If the CFTC was going to regulate BTC and Ether, then surely it wasn’t going to ban them, which is a real concern.
In his first public appearance in October, Tarbert also emphasized the importance of blockchain and digital assets. The U.S. has been falling behind in blockchain innovation, receiving little support from U.S. policymakers and regulators, according to Perianne Boring, CEO of the Chamber of Digital Commerce. However, here the chairman of the CFTC said, “I want the United States to lead because whoever leads in this technology is going to end up writing the rules of the game.” This was an “incredibly important” development, Boring told Cointelegraph.
Fidelity Investments (Custody):
Custody isn’t the most exciting segment of the crypto world, arguably, but it is a critical one, especially as the industry matures. It figures in many real-life investment decisions. How, for instance, will older Bitcoin holders pass on their BTC to their heirs when they die?
In 2019, Fidelity Investments, the mutual fund colossus ($7.2 trillion under administration), stepped up with a full rollout of its Fidelity Digital Assets custody unit, four years in the making, which targets institutional investors like hedge funds, family offices and market intermediaries.
The firm’s carefully charted deployment route was marked by a series of milestones: Initial research (2014), formation of a blockchain incubator and initiation of a proof-of-concept process (May 2015), acceptance of Bitcoins as charitable donations by Fidelity Charitable (November 2015), formation of academic and industry partnerships (June 2016), acceptance of Ether for charitable donations (September 2017) and Fidelity Digital Assets unit announced (October 2018).
In mid-December 2019, Fidelity Digital Assets announced that it may add support for Ether in 2020 if there is sufficient demand for it.
Utility Settlement Coin project/Fnality International (Bank Consortium)
Settling cross-border trades is often cited as a promising use case of blockchain technology, and, in 2019, a global banking consortium moved closer to putting that proposition to the test.
In June, 14 financial institutions from the U.S., Europe and Japan collectively invested $60 million in a new company, Fnality International, that will build an Ethereum blockchain, upon which trades among the banks will be settled using a token called the Utility Settlement Coin (USC) — backed with cash collateral deposited in central banks.
Spearheaded by Switzerland’s UBS in 2015, the Utility Settlement Coin project’s additional shareholders include Banco Santander, Bank of New York Mellon, Barclays, CIBC, Commerzbank, Credit Suisse, ING, KBC Group, Lloyds Banking Group, Mizuho Bank, MUFG Group, Nasdaq, Sumitomo Mitsui Banking Corporation and State Street Bank & Trust.
One key challenge facing the consortium will be interoperability, according to Olfa Ransome, Fnality’s chief commercial officer:
“Not only must interoperability be achieved between legacy and digital venues and platforms, but also between competing blockchains — to support atomic settlement regardless of the standards and protocols — and between different means of on-chain payment.”
The platform is expected to be operational by mid-2020 once regulatory approvals have been secured.
Fairfax County Retirement Systems (Pension Fund)
In February, Virginia’s Fairfax County’s Retirement Systems (FCRS) became the first U.S. pension fund to invest at least a portion of its retirement holdings ($21 million) in cryptocurrency assets. The allocation, through Morgan Creek Digital, was just a small portion of the system’s assets, “given that the blockchain technology industry is still in its early stages,” explained FCRS to its participants. It reportedly invested another $50 million in a second Morgan Creek Digital fund in October.
Pension funds’ conservative mandates have made them reluctant crypto investors until now; they are generally more cautious than hedge funds and university endowments.
Chicago Mercantile Exchange (Exchange)
Bakkt drew many of the crypto exchange headlines in 2019, but the Chicago Mercantile Exchange (CME), the world’s largest futures market, notched the most Bitcoin futures contracts. At its height, in May 2019, CME was averaging $515 million in daily volume and more than 13,600 futures contracts each day. On May 13 alone, Bitcoin traded a record daily volume of 33,677 contracts, equivalent to over 168,000 BTC (worth $1.705 billion at the time).
CME’s activity dropped toward the end of 2019, though — from a year-to-date daily average of more than 7,000 Bitcoin futures contracts in May to less than half of that by early December.
CME continues to expand its crypto product offerings, however, announcing in November plans to introduce options on Bitcoin futures contracts by mid-January 2020. Some industry players believe the Bitcoin derivatives market will one day dwarf the BTC spot market.
B3i Services AG (Insurance Consortium)
In July, the insurance industry’s high-profile blockchain consortium, B3i Services AG, announced its first product, a catastrophe excess-of-loss reinsurance coverage. The consortium expected it to be on the market for the January 2020 renewal season.
Formerly known as the Blockchain Insurance Industry Initiative, B3i, incorporated in 2018, employs blockchain technology to reduce friction in the transfer of risk. Each reinsurance contract in the network is written as a smart contract atop an open-source Corda blockchain platform. The smart contracts are capable of automatically validating a condition and can determine, for example, whether an asset should go to a nominee or back to the source, or a combination thereof.
B3i started with five insurance companies experimenting with Ethereum in May 2016. Today, the consortium encompasses 18 insurance companies and reinsurers from five continents — including Aegon, Allianz, Axa, Swiss Re, Liberty Mutual, Munich Re, Tokio Marine and Scor, among others.
Harvard University (University Endowment)
When it was reported in April that Harvard University’s investment arm, Harvard Management Co. (assets: $38.3 billion), was making its first crypto investment, it was hailed as a win for the cryptocurrency/blockchain sector, which has struggled to attract institutional investors with deep pockets.
Admittedly, the investment in blockchain-toolmaker Blockstack tokens was worth less than $12 million, a drop in the bucket for the world’s largest university endowment, but following Yale University’s lead in 2018 — that school invested in two crypto funds, managed by Andreesen Horowitz and Paradigm, respectively — it could signal a growing trend among high profile U.S. universities. Other elite university endowments, including Stanford and MIT, have been quietly testing the crypto waters, reported Cointelegraph in May.
Compliance Issues Persist
Key obstacles remain, however, before institutions really plant their flag in crypto/blockchain territory. Chainalysis conducted a poll of financial institutions last November, in which more than half of the respondents cited compliance in one form or another as the issue preventing them from investing more in cryptocurrency. Also, 39% said they worry about the inability to control illicit activity, while nearly 18% indicated that they are unsure of their ability to comply with government regulations in the space.
With growing commitments from heavyweights, like Fidelity, JPMorgan and ICE, however, and even stirrings from endowments and pension funds, there were clear signs in 2019 that large institutions are moving closer to embracing cryptocurrency and blockchain technologies in 2020.
Morgan Creek And Exos File Bitcoin Fund With SEC
The new risk managed Bitcoin fund was filed with the SEC on Thursday.
Morgan Creek and Exos filed a new Bitcoin (BTC) fund with the U.S. Securities and Exchange Commission, or SEC, on Thursday. If approved, the fund will offer institutional investors another way to long the flagship cryptocurrency without the volatility of owning it outright.
Kevin Rooke reported Friday that the Morgan Creek-Exos Risk Management Bitcoin Fund has been filed with U.S. regulators. The fund intends to provide direct exposure to Bitcoin with inbuilt mechanisms to reduce allocation when quantitative signals turn negative.
As Rooke reports, the fund “handles technical details around trade, transfer, and custody of Bitcoin.”
In its initial marketing materials, Exos says there’s a need to smooth out market volatility for institutional investors who are unaccustomed to Bitcoin’s turbulence and highly technical properties.
According To Exos:
“The Fund will fully allocate capital to bitcoin when its indicators are positive and reduce or exit its position when its indicators turn negative.”
Founded by Mark Yusko, Morgan Creek Capital Management provides alternative investment products to institutional investors. The firm operates a digital asset division that specializes in blockchain technology and Bitcoin investments.
As a business-to-business market platform, Exos Financial is involved in securities, commercial finance and asset management services.
Institutional onramps into Bitcoin and other cryptocurrencies have ushered a new wave of adoption in 2020. Crypto funds, derivatives and exchange-traded products have spurred a new parabolic trend in Bitcoin’s price.
Growing mainstream adoption has been aided by massively bullish calls from legendary investors such as Paul Tudor Jones and Stanley Druckenmiller, both of whom own Bitcoin.
Beyond investor adoption, corporations have also laid stake in Bitcoin this year. It’s estimated that corporate treasuries hold roughly 842,229 BTC, which is equivalent to $15.7 billion in today’s value.
Institutions Will Protect Bitcoin From Government Overreach: Erik Voorhees
Bitcoiners should embrace institutional adoption as it keeps everyone honest, says Erik Voorhees.
Institutional investors will play an important role in securing the future of cryptocurrencies like Bitcoin (BTC), according to Erik Voorhees, CEO and founder of ShapeShift.io.
In a panel discussion at this year’s LaBitConf, Voorhees said Bitcoin’s adoption curve will grow substantially over the next five to ten years. In that time, Voorhees estimated that half the world could have exposure to BTC. He believes that mass adoption will occur much later, however, once Bitcoin becomes the global monetary standard.
The panel was virtually unanimous in the view that Bitcoin is better served with entities of different persuasions buying and holding BTC. In this vein, institutional adoption is a net positive for the ecosystem because it ensures that the rules of the game never change and that governments don’t try to interfere.
Voorhees said governments have a greater incentive to censor Bitcoin if it’s used primarily by retail investors. With large institutions in play, there may be a natural “bulwark” against government overreach.
Regarding Bitcoin, Voorhees noted his belief that “The greater the mix and diversity of holders, the better,” before continuing “Democratization of control over money is the essence of Bitcoin.”
Although Voorhees says we are still in the very early stages of institutional adoption, 2020 has been a watershed year for the digital asset in terms of orthodox acceptance. Major investors like Paul Tudor Jones and Stanley Druckenmiller have confirmed their stake in Bitcoin, while Paypal and Cash App are buying up most newly mined BTC.
Meanwhile, digital asset manager Grayscale continues to amass Bitcoin and Ethereum (ETH) amid record inflows into its funds.
Bitcoin is experiencing a supply shortage that’s occurring almost in lockstep with the latest deflationary halving event. With supplies capped at around 900 BTC per day, institutional adoption appears to be having a positive impact on price discovery.
In Voorhees’ view, the real surge in institutional interest will occur near the peak of the next bull market when not owning Bitcoin will inflict reputational damage.
Higher prices are no issue for major institutions, many of which are waiting for Bitcoin to “catch up to their liquidity,” according to Voorhees.
Mike Novogratz Has 50% Of Net Worth In Crypto, Advocates Up To 5% For Investors
“I think a new investor could put 5% into Bitcoin. Bitcoin’s not going back to zero.”
Galaxy Digital founder and CEO Mike Novogratz is encouraging investors to devote a larger percentage of their portfolios to crypto.
In an interview with CNN’s Julia Chatterley today, Novogratz said he had “changed his tune” on previous advice that investors should allocate roughly 1% of their net worth to Bitcoin (BTC) and other cryptocurrencies. The CEO has said as recently as November that people should invest up to 3% into BTC and HODL for five years.
“I think a new investor could put 5% into Bitcoin,” said Novogratz. “Bitcoin’s not going back to zero […] It could certainly trade back to $14,000 — you could lose 30-40%, but you’re not losing 80-90% of your money.”
“You’re going to see every single financial institution forced into this space.”
“We’re at the beginning innings of rebuilding the infrastructure that American & global business will be done on in the future.” pic.twitter.com/b0hdiQwrrG
— Julia Chatterley (@jchatterleyCNN) December 8, 2020
Novogratz said these numbers were based on the “stability surrounding Bitcoin,” adding that the coin was “fulfilling its role as digital gold” with a store of value. The CEO also said he believes Bitcoin volatility will “come lower.”
The Galaxy Digital CEO has an estimated net worth of $700 million. When Chatterley pressed him to put a number on his investments, Novogratz said his “overall crypto exposure is probably 50%.”
Novogratz has also advocated investing at least some of one’s net worth in Ether (ETH), while stating the token had “a venture flare to it.” He hedged his bets on other altcoins, saying that some would have “a lot of value” in the future, while others wouldn’t.
Novogratz is well known for his prominent Bitcoin plugs. In November, he predicted the price of Bitcoin would go “to 20K and then To 65K.”
Tyler Winklevoss: ‘Smartest People In The Room Buying The Bitcoin Quietly’
Big name financial players continue buying into Bitcoin.
Throughout 2020, more than a handful of traditional financial giants have picked up stacks of Bitcoin (BTC), including the likes of billionaire Paul Tudor Jones and business intelligence firm MicroStrategy. These investments are part of a flow of big money entrances into BTC, Gemini crypto exchange co-founders Tyler and Cameron Winklevoss recently said.
“This is the most sophisticated investors, the smartest people in the room, buying the Bitcoin quietly, so it’s not a FOMO [fear of missing out] thing,” Tyler said in a CNBC interview, published on Friday. Major institutions are here for this go-round, as opposed to Bitcoin’s retail-led bull run in 2017, Tyler explained.
Over the course of this year, in addition to Tudor Jones and Microstrategy, Stanley Druckenmiller, Jack Dorsey’s Square, MassMutual, and Guggenheim Partners have all gained exposure to Bitcoin. Their crypto plays come in line with an unstable global economic atmosphere rife with money printing efforts.
Bitcoin is often compared to gold as a store of value and inflation hedge. Druckenmiller and Tudor Jones align themselves with such a narrative.
Tyler Winklevoss Added:
“Also, you have publicly-traded companies like Square and MicroStrategy putting their treasury cash into Bitcoin because they’re worried about the oncoming inflation and the scourge of inflation with all the money printing and the stimulus from the COVID pandemic lockdowns.”
When asked about Bitcoin’s volatility as an asset for transactions, the brothers called Bitcoin a “buy and hold” strategy comparative to gold. “We see Bitcoin right now as an emergent store of value that will disrupt gold, and that gets us to a $9 trillion market cap for Bitcoin,” Tyler said.
“So it actually doesn’t have to be used as a currency, and the volatility doesn’t matter if it’s actually a store of value,” he added. The billionaire also expects some level of dwindling volatility for the asset over time.
At time of publication, Bitcoin’s market cap sits at about $335 billion — a far cry from $9 trillion, although the asset recently broke its all-time price high, set in 2017.
BitGo Assets Hit $16 Billion As Institutional Adoption Grows
Digital assets under custody reached a new milestone this month, BitGo says.
BitGo, whose investors include Galaxy Digital Ventures, Goldman Sachs and Valor Equity Partners, reported Wednesday that digital assets under custody have surpassed $16 billion for the first time, offering further validation that institutional demand has arrived.
In an official press release, BitGo said institutional investors are seeking exposure to digital assets “for custody, trading and lending.”
CEO Mike Belshe Commented:
“We’re seeing unprecedented interest from institutional investors as a result of the pandemic’s economic impact, as well as Bitcoin’s extraordinary performance.”
Founded in 2013 as a digital wallet service, BitGo has expanded to provide liquidity, custody, and security solutions for institutional investors. The company claims to process over 20% of all global Bitcoin (BTC) transactions and supports over 300 digital assets.
BitGo made headlines a few months ago after anonymous sources told Bloomberg that the company had become an acquisition target of PayPal Inc. Representatives from both companies refused to comment at the time.
Demand for institutional-grade crypto has been on the rise this year, as Bitcoin’s digital gold narrative continues to attract new investors. Companies like Grayscale, PayPal, MicroStrategy, Ruffer Investment Group and MassMutual have been at the center of the adoption drive.
As Cointelegraph reported earlier this week, Anthony Scaramucci’s multi-billion-dollar hedge fund, SkyBridge Capital, has also submitted formal paperwork with the Securities and Exchange Commission to launch a new Bitcoin fund.
Mike Novogratz Attributes BTC’s Rise Past $30K To Institutional Adoption
According to the Galaxy Digital CEO, institutions have a greater opportunity to buy Bitcoin currently in circulation, driving up the price.
Galaxy Digital founder and CEO Mike Novogratz believes institutional investors are helping drive the current Bitcoin bull run.
In an interview with BBC World News today, Novogratz said governments around world printing money and “debasing fiat money” was fueling the ongoing Bitcoin (BTC) bull run, but institutional players getting into crypto may be the bigger story. The Galaxy Digital CEO said major firms had changed their tune on crypto in the last three years, potentially affecting the supply of available coins.
“Now we’re seeing places like PayPal — at 340 million customers — servicing Bitcoin and selling Bitcoin [along with] big insurance companies in the United States,” said Novogratz. “As the institutions move in, there just is not a lot of supply […] There are a lot more than 21 million millionaires out there.”
Fun on the BBC. pic.twitter.com/mTSNXMVceZ
— Mike Novogratz (@novogratz) January 3, 2021
Macro investor Raoul Pal echoed Novogratz’s bullish sentiment, saying that he believes it’s possible for the price of Bitcoin to reach “between $400K and $1.2M” by the end of this year if trends were to continue. Pal revealed in November that 98% of his liquid net worth was invested in BTC and Ether (ETH), but added that he “still [doesn’t] own enough.”
Novogratz has also changed his opinion on what percentage of their portfolios investors should be allocating to Bitcoin. Before November, the Galaxy Digital CEO said Bitcoiners should have invested up to 3% into BTC and HODLed for five years. However, last month he advocated new investors put 5% into BTC because “Bitcoin’s not going back to zero.”
Many major institutions joined the crypto space for the first time in 2020. Business intelligence firm MicroStrategy announced that it had purchased $425 million in BTC — an investment now worth more than $1.2 billion — and later bought the dip to add $650 million BTC to its holdings. In December, Massachusetts-based insurance firm MassMutual purchased $100 million in BTC for its general investment account.
At the time of publication, the price of Bitcoin is $33,727, having risen 6% in the last 24 hours. This puts the crypto asset within reach of a new all-time high since passing $34,700 earlier today.
Bitwise AUM Surpasses $500 Million As Institutions Flock To Crypto
The fund manager’s inflows suggest investors are seeking broad exposure to cryptocurrencies, including Bitcoin and Ether.
Leading crypto fund manager Bitwise Asset Management reached a major milestone in the fourth quarter of 2020 as inflows into its products surged to new record highs, underscoring heightened institutional demand for digital assets.
The firm’s assets under management, or AUM, surpassed $500 million, according to a Monday press release. That’s a considerable increase from the $100 million in AUM held on Oct. 28, 2020.
The Press Release Reads:
“Bitwise saw record inflows into its funds during Q4 2020, surpassing the total cumulative inflows of 2018 and 2019 combined.”
Most of the new demand came from investment professionals such as financial advisers, hedge funds, corporations and other institutional investors.
The Bitwise 10 Crypto Index Fund, which provides broad exposure to the largest digital assets, is by far the most popular product, with over $400 million in assets under management. The fund holds Bitcoin (BTC), Ether (ETH), Litecoin (LTC) and seven other cryptocurrencies.
Bitwise says demand for its Bitcoin and Ethereum-focused funds also saw higher demand in the fourth quarter.
Hunter Horsley, Bitwise’s co-founder and CEO, said “The speed at which professional investors are moving into crypto right now is remarkable.”
Before the new year, Bitwise announced it had liquidated its position in XRP in response to the lawsuit filed against Ripple Labs by the United States Securities and Exchange Commission. Beyond the XRP fiasco, the cryptocurrency market appears poised to expand as more institutional investors come on board.
David Lawant, a research analyst at Bitwise, recently told Cointelegraph that there’s less “career risk” for entering crypto, which means more institutions are coming on board. Bitcoin’s growing appeal as a safe-haven asset that can potentially offset the so-called “great monetary inflation” has become a key catalyst for adoption, he said.
5 Largest Regulated US Digital Asset Managers Hold Over $46B Of Crypto
Forbes ranks the top traditional asset managers, but who ranks the top regulated digital asset managers?
Cointelegraph Consulting’s 2021 ranking of the top five United States-based regulated crypto asset management firms highlights that Bitcoin’s explosive growth in price has catapulted many digital asset managers past the half-billion-dollar mark.
As more and more investors are turning to the digital asset market, these companies are on track to becoming important players in the U.S. financial industry.
Grayscale is one of the largest and well-known firms in the crypto world, which was founded in 2013 by its parent organization — Digital Currency Group. Grayscale now has a total of more than $40 billion in assets under management, which consist of investments in Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH), Litecoin (LTC), Zcash (ZEC), Stellar (XLM), Horizen (ZEN) and more. The fund offers various products to its clients, both single-asset products and diversified baskets.
Pantera Capital Management
Pantera Capital was founded in 2003 by Dan Morehead and is headquartered in California. Pantera is focused on a wide range of assets connected with the digital economy — private equity, tokens and more. Pantera’s $4 billion in AUM is distributed among four main funds: liquid token fund, early-stage token fund, Bitcoin fund and venture fund.
Bitwise Asset Management
Bitwise was founded in 2017 by a team of software experts combined with experienced asset managers and is located in San Francisco. This company has more than $1 billion in AUM, which is concentrated in several funds: 10 crypto index fund, decentralized finance crypto index fund, Bitcoin fund, and Ethereum fund, among others.
This firm has several offices across the world including London, Hong Kong and Amsterdam with its headquarters in New York. Galaxy Digital focuses mainly on BTC and ETH, although it also has a diverse crypto index fund. In total, Galaxy Digital’s AUM is more than $800 million.
The CEO of Galaxy Digital, Mike Novogratz, is a regular commentator on traditional TV news networks such as Bloomberg. He recently claimed he believes that nonfungible tokens will stay “for the rest of our lives.” They are also known to be involved in mining proof-of-work-based digital assets and launching a regulated investment vehicle for retail investors.
Located in California, Wave Financial offers several investment solutions such as funds: Select 5 Index fund, a BTC Income & Growth Digital Fund, Tokenized Real Asset fund (tokenized Kentucky Whiskey Barrels), Active Hybrid VC fund. Additionally, the fund offers wealth management solutions for crypto treasury and wealth management, alongside protocol treasury and inventory management. According to data shared by Wave Financial, the fund has $500 million in assets under management.
The Cointelegraph Consulting’s 2021 ranking of the largest U.S.-based and regulated digital asset managers only includes asset managers that are dedicated to cryptocurrency and blockchain. Traditional asset managers that have a small allocation to digital assets were not included.
This list also does not include crypto-focused asset managers that are only invested in venture capital and private equity. Cointelegraph Consulting prepared the list, but it’s for investors to decide which of the funds are most in line with their interests.
This article was prepared by Cointelegraph Consulting, and the results of the ranking are based on publicly announced AUMs and data acquired by emailing several digital asset managers. Cointelegraph Consulting is not an investment company, investment advisor or broker/dealer.
This publication is for information purposes only and represents neither investment advice nor an investment analysis or an invitation to buy or sell financial instruments. Specifically, the document does not serve as a substitute for individual investment or other advice.
Ark Invest, Edge Wealth Management, And Rothschild Investment Accumulate Crypto
Cathie Wood’s Ark Invest purchased more than 450,000 GBTC shares in two separate buys this week.
As the price of Bitcoin returned to more than $32,000 this week, some major firms announced they had increased their exposure to cryptocurrencies through Grayscale’s crypto trusts.
According to a Friday filing with the U.S. Securities and Exchange Commission, or SEC, New York-based investment firm Edge Wealth Management currently holds 54,134 shares of Grayscale’s Bitcoin Trust (GBTC), valued at $27.13 at the time of publication, and 25,280 shares of the company’s Ethereum Trust (ETHE).
The crypto holdings are worth almost $2 million at $1,468,655 and $466,668, respectively, roughly 0.3% of the $703 million total assets under management the company reported on Feb. 2.
Grayscale’s crypto trusts are not new investment opportunities for Edge. The investment firm held 37,605 GBTC and 17,300 ETHE shares in April, representing increases of 44% and 46%, respectively.
Some institutions’ exposure to Bitcoin (BTC), Ether (ETH), and other cryptocurrencies through Grayscale have increased as digital currencies seemingly play a larger role in the global economy. Similar filings with the SEC show Rothschild Investment Corp quadrupled its exposure to Bitcoin through Grayscale, owning 38,346 GBTC shares in April and 141,405 GBTC as of June 30.
With a reported more than $1 billion in assets under management as of April 8, the Bitcoin trust shares represent less than 0.09% of the investment firm’s holdings.
However, Cathie Wood’s Ark Invest is continuing to purchase GBTC shares at higher rate than the two aforementioned companies. This week, the investment firm reported it purchased more than 450,000 shares of Grayscale Bitcoin Trust in two separate buys, bringing its combined holdings to more than 9 million shares, or roughly 0.5% of its portfolio. At its peak in March, GBTC represented 0.9% of Ark’s portfolio.
“The investment community continues to express interest in the digital currency asset class, and the crypto ecosystem more broadly, and as these assets gain mainstream adoption, we anticipate investors will seek new ways to access digital currencies to further diversify their portfolios,” said Grayscale CEO Michael Sonnenshein in a letter to investors.
The reports of GBTC purchases come the same week Grayscale unlocked 16,240 BTC worth of its Bitcoin Trust shares after six months. Though there was some speculation the price of the crypto asset could be adversely affected by such a large release in a single day, BTC saw a roughly 2.9% increase in price week-over-week and reached $32,457 at the time of publication.
Institutions Are Buying Bitcoin Like It’s Late 2020
The amount of Bitcoin available on derivatives exchanges hits its lowest since May 11 — before the China miner rout took hold.
Bitcoin (BTC) reserves on derivatives exchanges have dropped to levels last seen before the May price crash.
Data from on-chain analytics service CryptoQuant confirmed that as of Tuesday, derivatives reserves totaled 1.256 million BTC — the least since May 11.
Institutions Repeat Q4 2020
Against a backdrop of institutional interest returning to cryptocurrency instruments such as the Grayscale Bitcoin Trust (GBTC), figures show that major players have in fact been adding to their BTC holdings throughout the downturn.
“Big money has been buying,” analyst William Clemente III commented this week.
Exchange balances prove the point, with derivatives platforms seeing a repeat of the trend last witnessed at the end of 2020.
Even during the most intense phase of the BTC bull run this year, derivatives balances conversely grew — a decreasing balance characterized only the very beginning of the run to $64,500.
“Since May 19th, entities with 10K-100K BTC have added +269,450 to their holdings ($12.1B),” Clemente III added, highlighting further data.
“These entities have between $450M–$4.5B of their capital allocated to Bitcoin.”
Accumulation In Action
Institutions have not been put off by any overriding narrative from within or beyond cryptocurrency, including China’s miner rout since May, or the ongoing saga over the United States’ infrastructure bill.
As Cointelegraph previously reported, retail exchange balances have already been heading lower for some time.
As of Tuesday, the total exchange balance figure stood at 2.44 million BTC, also a three-month low.
Titan Global Capital Management Offers Crypto-Currencies To It’s Clients
Titan Crypto Holdings:
Have you heard? Last week, we officially launched Titan Crypto, our expert-managed portfolio of cryptoassets that we believe are positioned for outstanding long-term returns with minimal correlation to U.S. equities and with attractive hedging qualities.
Our goal at Titan is to outperform our benchmarks on an after-fees basis. Since our inception on 8/10, we’ve generated ~5% of alpha above our benchmark (the Bitwise 10 Large Cap Crypto Index*) mainly driven by our bullish bets on Cardano (+32.4%) and Stellar (+24.8%) paying off early.
Our clients who invested in Titan Crypto have seen ~8.5% gains in their crypto portfolio in a matter of days.
We believe crypto has a massive runway ahead. Adoption of cryptocurrencies and blockchain protocols is exploding, and we expect this trend to prove structural and long-term in nature, driving significant returns for crypto investors.
Our Price Targets
With each investment we make across our portfolios, we have price targets derived from our quantitative and fundamental research. Given the nascency of this asset class, there is a bit of art alongside the science, but that’s why you hire us as your investment manager.
Bitcoin is the world’s first widely-adopted cryptocurrency that allows for secure peer-to-peer transactions on the internet.
1 Year Price Target: $100,000 (~120% upside potential)
>> What you need to believe: Bitcoin and the broader crypto market continue to gain healthy momentum for their on-chain fundamentals, and bitcoin has another breakout to the upside after recent periods of consolidation.
3-5 Year Price Target: $300,000 (~550% upside potential)
>> What you need to believe: Bitcoin can reach global value of gold. Long-term bullish scenarios see bitcoin used as a medium-of-exchange, global monetary reserves, and collateral asset for the next iteration of internet (Web 3.0).
Ethereum is the world’s largest decentralized operating system and the backbone to many of blockchain’s most interesting applications.
1 Year Price Target: $9,000-11,000 (~180-240% upside potential)
>> What you need to believe: Ethereum reverts to its 3-year average valuation ranges at its current level of network activity including on-chain transaction volume, generated fee revenues and total value locked.
3-5 Year Price Target: $30,000 (~840% upside potential)
>> What you need to believe: Ethereum captures 0.5-1% annual earnings of global financial institutions.
Cardano is one of the most promising proof-of-stake smart contract platforms to date, set to challenge Ethereum’s dominance in the space.
1 Year Price Target: $3-4 (~45-95% upside potential)
>> What you need to believe: Cardano successfully completes its Alonzo hard fork upgrade successfully without delay and gains strong early traction from users and developers building dapps such as DeFI, NFTs, DAOs.
3-5 Year Price Target: $5-10 (~140-385% upside potential)
>> What you need to believe: Cardano is able to capture sizable market share in the smart contract race, or even penetrate Ethereum’s lead while making tremendous strides in forming partnerships with developing nations in Africa and Asia.
Stellar is the premier payment network for global institutions, enterprises, and retail with lightning fast transactions at a fraction of the cost of other blockchain applications.
1 Year Price Target: $0.70 (~90% upside potential)
>> What you need to believe: The Stellar Development Foundation continues its solid traction in expanding enterprise partnerships and adoption, and growing its network activity.
3-5 Year Price Target: $1.50 (~305% upside potential)
>> What you need to believe: Stellar continues to improve its tokenomics, launches its Turing-complete smart contract functionality in the near future, and develops a flourishing decentralize apps ecosystem — ultimately resulting in valuation multiples expansion to or exceeds XRP’s current level.
Under The Hood Of Titan Crypto
For months, our team has been conducting deep fundamental and quantitative research to identify what we believe to be the highest quality cryptoassets for the next 3-5+ years.
We’ve constructed a concentrated yet balanced portfolio of these cryptoassets, with strict controls to attempt to mitigate risk and to screen out assets that we believe entail outsized risks around custody, liquidity, regulatory, and other concerns.
We then determine the appropriate weightings into each cryptoasset, based on our conviction. We’ll be regularly and tactically changing these weights (and rebalancing to them) during periods of excess volatility in an attempt to maximize risk/reward.
To check out Titan Crypto, be sure to update your Titan app in the Apple or Google Play store.
The Titan Investment Team
Billionaire Simon Nixon’s Venture Capital To Increase Crypto Allocation
A new report suggests that 4% of the total Bitcoin supply — 816,379 BTC — is owned by 14 Bitcoin fund issuers and asset managers.
English billionaire and Moneysupermarket.com founder Simon Nixon has plans to increase his crypto investments through his London-based venture capital firm.
According to a Bloomberg report on Thursday, Adam Proctor, managing director for Nixon’s investment firm Seek Ventures, said that the company intends to increase the “allocation to crypto as we feel it is an important area for the future.”
Furthermore, Proctor said that Seek Ventures is currently on the lookout for an analyst who can lead this crypto-focused effort.
Digital currencies are drawing the interest of family offices, according to Goldman Sachs, which stated that half of the family offices it does business with are interested in adding crypto to their portfolios.
The Bitcoin (BTC) ecosystem has seen the steady involvement of billionaires, including Carl Icahn, who recently said he may invest up to $1.5 billion into crypto, stating, “Bitcoin to me is just a store of value.”
Moreover, the recent temporary downfall of Bitcoin’s price to below $30,000 was seen as an investment opportunity for Alameda Research, a Hong Kong-based firm led by FTX CEO Sam Bankman-Fried.
A new report suggests that 4% of the total Bitcoin supply — 816,379 BTC — is owned by 14 Bitcoin fund issuers and asset managers, currently representing $40.1 billion.
Out of the lot, the Grayscale Bitcoin Trust stands as the leader with 654,600 BTC — more than 3% of BTC’s supply. Coming in second, CoinShares’ XBT Provider represents 0.23% of the total supply with 48,466 BTC ($2.4 billion), while the remaining 113,313 BTC is held by the remaining 12 issuers.
In addition, the data also suggests that mainstream businesses Tesla (42,902 BTC), MicroStrategy (108,992 BTC) and blockchain giant Block.one (140,000 BTC) have cumulatively accumulated over $14.2 billion worth of Bitcoin.
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