SALES, RENTALS & LAYAWAYS

PROTECTING EVERYTHING THAT HAS EVER BEEN OF VALUE TO YOU

Open 24/7/365

We Have A Life-Time Warranty /
Guarantee On All Products. (Includes Parts And Labor)

Influx Of Institutional Investors Causes Bitcoin To Perform More Like A Traditional Asset (#GotBitcoin?)

Bitcoin Trading At Strong Correlation With Gold As Traditional Investors Step In

Influx Of Institutional Investors Causes Bitcoin To Perform More Like A Traditional Asset (#GotBitcoin?)

One example of institutional money coming into the sector is the growth of the Bitcoin Investment Trust, an over-the-counter exchange-traded fund sold by Grayscale Investments. In 2013, its first year of existence, the trust had $51 million in assets under management. By the end of 2017, assets had swelled to about $3.5 billion. With the selloff this year, that had fallen to about $900 million recently. Influx Of Institutional Investors Causes Bitcoin To Perform More Like A Traditional Asset

Influx Of Institutional Investors Causes Bitcoin To Perform More Like A Traditional Asset (#GotBitcoin?)

Not too long ago, bitcoin and its universe of cryptocurrency peers seemed light years away from traditional markets, a distant point where assets traded under their own laws of physics.

Caitlin Long on Bitcoin, Blockchain And Rehypothecation

But capital and investors from traditional markets have flowed into cryptocurrencies, making some of them behave like traditional assets—just far, far riskier.

Bitcoin has had a terrible year. It dropped by more than half in the first several weeks of 2018, wobbled up and down for several months and then tumbled sharply again in the fourth quarter alongside wilting stock markets. For an asset branded as an alternative to the traditional financial system, it has offered little haven. Bitcoin stood at $3,630.94 Thursday evening. Its high for the year came near $17,000 in January.

Influx Of Institutional Investors Causes Bitcoin To Perform More Like A Traditional Asset (#GotBitcoin?)

Bitcoin’s correlations to other assets aren’t strong, but they are measurable. On a scale of -1 to +1, ranging from completely inverted to perfectly correlated, bitcoin traded at about a 0.84 correlation to gold over the past five days, according to data from research firm Excalibur Pro Inc. That isn’t unexpected for an asset its backers bill as a new version of the yellow metal. Bitcoin also traded at a 0.77 correlation to the Chicago Board of Options Exchange’s VIX index, which measures market volatility.

Reviewing the Year in Cryptocurrency

It makes sense that bitcoin would trade in step with the market’s “fear gauge.” With central banks over the past decade flooding global markets with liquidity and with extremely cheap borrowing costs, money found its way into riskier assets. And there is no riskier asset than a rebel currency.

Another pathway has been venture capital. In 2013, venture-capital investment in the bitcoin and blockchain sector totaled only $96 million, according to data from CoinDesk. In 2016, it was about $500 million. By the end of 2017, all-time VC funding climbed over $2 billion.

Influx Of Institutional Investors Causes Bitcoin To Perform More Like A Traditional Asset (#GotBitcoin?)

Whatever the actual dollar flows are in the future, traditional capital appears set to continue coming into crypto markets. Bitcoin’s backers are making efforts to attract institutional money to their asset class. They are building services like exchanges that can pass regulatory muster, futures trading and even exchange-traded funds.

If any of those efforts is successful, then more professional money will likely come into the sector.

Influx Of Institutional Investors Causes Bitcoin To Perform More Like A Traditional Asset (#GotBitcoin?)


Related Articles:

Annual January 3rd “Proof Of Keys” Celebration Of The Genesis Block! (#GotBitcoin?)

ETFs, Mutual Funds See Sudden And Dramatic Drop In Money Flowing In (#GotBitcoin?)

Trump Administration’s ‘Plunge Protection Team’ Convened Amid Wall Street Rout (#GotBitcoin?)

Crypto Craze Drew Them In; Fraud, In Many Cases, Emptied Their Pockets (#GotBitcoin?)

Your questions and comments are greatly appreciated.

Monty H. & Carolyn A.

Go back

Leave a Reply