Category: Investment

Investment

Competition drives young traders’ crypto investments, says UK watchdog

Competition drives young traders’ crypto investments, says UK watchdog

Most young investors in the United Kingdom are entering the crypto market thanks to the hype on social media and news, but they are not aware that the market is not regulated, a new study published by the U.K. Financial Conduct Authority (FCA) revealed.The survey revealed that a majority (69%) of the investors under the age of 40 mistakenly believe that crypto markets are regulated. More than three-quarters (76%) of young investors who put money on risky assets like cryptocurrencies, forex or crowdfunding are driven by competition with friends and family. The financial watchdog surveyed 1,000 British investors aged between 18 and 40 who invested in high-risk investment products in a bid to promote its five-year InvestSmart campaign, The Independent reports. Launched with a $15 million budget (£11 million), the campaign aims to raise awareness among young people about high-risk investments. The FCA estimates that more than a million investors in the U.K. have bought high-risk investments during the COVID-19 pandemic.The research found that more than half of the participants use social media, other people, and news stories as key drivers when investing in specific products. While a majority prefera more stable returns than dramatic price movements, only 21% consider holding their most recent investment for more than a year. Commenting on the results, FCA executive director of markets Sarah Pritchard stressed that more people are chasing high returns with higher risks. “We want to give consumers greater confidence to invest and help them to do so safely, understanding the level of risk involved,” she added.Related: Poll shows Brits concerned over the prospect of a digital pound The FCA survey follows Jon Cunliffe’s remarks on crypto regulations. Cunliffe, deputy governor for financial stability at the Bank of England, urged regulators to pursue crypto as a matter of urgency. Cunliffe said that the price volatility of crypto assets “could trigger margin calls on crypto positions forcing leveraged investors to find the cash to meet them, leading to the sale of other assets and generating spillovers to other markets.”

Brazilian Asset Manager Kinea Makes Exploratory Investment in Ethereum

Brazilian Asset Manager Kinea Makes Exploratory Investment in Ethereum

One of the biggest asset managers in Brazil, Kinea, disclosed it made an exploratory investment in Ethereum. The announcement was made by Marco Aurélio Freire, manager of funds for Kinea, who stated the company had invested a small amount of its holdings in ethereum starting two months ago. Kinea, the investment arm of Banco Itau, has more than R$56 billion (about $10.2B) in assets under management.
Kinea Looks Into Crypto Investments
Kinea, one of the leading asset managers in Brazil, has made an exploratory investment in the cryptocurrency world. The company, which has a vast amount of assets under management, chose to invest in ethereum instead of in the most popular choice, bitcoin. Marco Aurélio Freire, manager of the funds of the company, declared to local media the investment was made two months ago. Freire did not disclose the amount of the investment but did say it was a small amount to test the market.
Freire believes in the role of cryptocurrencies as a necessary asset to diversify portfolios. He stated:

I see cryptocurrencies as a secular trend in which it is worth having an exposure.

This seems to align with his beliefs about the current situation in Brazil and the necessity of international diversification of investments. Crypto assets can support investors in diversifying their portfolios.

Ethereum vs. Bitcoin
For many, the election of Kinea could be strange in a world dominated by bitcoin investments at an institutional level. Freire justified this choice by stating that, while bitcoin was the kickstarter of the decentralized finance world, other currencies also have many interesting things to offer. Freire stressed:

People generally confuse cryptocurrencies with bitcoin, but there is much more to the cryptocurrency market than just bitcoin.

In this sense, Freire pointed to the recent success that NFTs (non-fungible tokens) have experienced, and how this success has reinvigorated the collectible and sports markets. Managers from Kinea had already declared that bitcoin, being the first cryptocurrency, had a relatively simple design. However, other cryptocurrencies came to refine the concept that bitcoin founded, addressing problems like scalability and environmental impact. Kinea managers stated:

We believe that more developed currencies and protocols should be more attractive to investors.

And in retrospect, Kinea’s investment has done pretty well. Two months ago, on August 18, the price of Ether was $3,184. Now, the crypto asset is worth $3,855 at the time of writing.
What do you think about Kinea’s ethereum investment? Tell us in the comments section below.

Tags in this story

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Read disclaimer

TradingView completes new funding round with $3B valuation

TradingView completes new funding round with $3B valuation

TradingView, the price charting platform used as a reference for price movements of cryptocurrencies and other assets, has secured $298 million in a funding round to attain a $3-billion valuation.Led by TradingView’s new investor, Tiger Global, the funding follows a strong growth of the platform’s user base, mostly retail investors, during the pandemic. According to the announcement, TradingView experienced a 400% increase in new accounts and a 237% increase in visitors in the last 18 months.TradingView CEO and co-founder Denis Globa highlighted Tiger Global’s expertise in fintech, adding that the partnership would contribute to informed financial trading. Established in 2011, the platform enables over 30 million monthly users in 180 countries to access price charts of assets such as cryptocurrencies, stocks and futures. “We built this company with the belief that people everywhere want the same thing: to be in control of their own economic futures,” Globa said, adding, “We work towards this by creating an environment where all traders and investors can look first, then leap.”Related: Elliptic raises $60M to advance crypto analytics serviceThe company said that TradingView aims to bolster its broker relationships with partnerships and integrations with major brokerage firms in a bid to enable visitors to trade directly from the platform.Tiger Global’s Alex Cook said that TradingView’s global standing among retail investors positions the company “to be the default social network and financial analysis platform used by all traders and investors.”A known investor in crypto, Tiger Global recently led another mega-funding round. Together with Coatue Management, the venture capital has invested $400 million into the crypto payments startup MoonPay. 

Crypto and pension funds: Like oil and water, or maybe not?

Crypto and pension funds: Like oil and water, or maybe not?

There are good reasons why pension funds should not invest in the crypto and blockchain space. The industry is too new, too volatile, and stultifyingly technical. Moreover, the rules and regulations to govern the sector have yet to be settled. But the fixed-income financial instruments that pension funds typically favor — like long-term government bonds — are scarcely paying anything these days, so the traditional caretakers of employees’ retirement funds have a dilemma: Where to find investment yield in a world where inflation is looming?It may not be entirely surprising, then, that pension funds — the most cautious of institutional investors — are now giving the booming crypto/blockchain sector a closer look.“Family offices led the charge into crypto funds several years ago, but we’ve seen increasing interest from pensions, and there are many pensions that now have exposure to crypto,” Stephen McKeon, a finance professor at the University of Oregon and a partner at Collab+Currency, told Cointelegraph.“We’ve seen increased interest from pensions” in the past year, added Christine Sandler, head of sales, marketing and research at Fidelity Digital Assets — part of an uptick among all institutional segments — “which we believe reflects the growing sophistication and institutionalization of the digital assets ecosystem, combined with a strong macro narrative driven by response to the pandemic.”Pension funds tend to be “more conservative, risk-averse investors relative to other segments,” according to Sandler, and they mostly favor investments that have exhibited long-term growth and low volatility, which might arguably make them leery of the crypto/blockchain space.An early adopterOne of the first United States-based pension funds to invest in blockchain firms was the Fairfax County Police Officers Retirement System, based in Fairfax, Virginia. It tested the waters back in 2018 with an 0.5% allocation in a fund that was investing in blockchain-related enterprises, Katherine Molnar, the fund’s chief investment officer, told Cointelegraph at the recent SALT conference in New York City.The fund raised its allocation to 1% in 2019, and in spring 2021, it added two new blockchain-related investment funds. The current target allocation is 2%, but because crypto and crypto-based companies have been rising in value, 7% of overall fund assets are now crypto-related — again, mostly “pick-and-shovel” type enterprises that support the industry — like crypto exchanges and custodians.The pension fund can’t rebalance because it is invested in venture capital funds, Molnar explained, but in mid-September, Fairfax signaled its intent to invest $50 million with Parataxis Capital, a crypto hedge fund that invests in digital tokens and cryptocurrency derivatives. “It’s not a directional bet, but it’s not totally illiquid either,” she told Cointelegraph.The fact that the police officers’ pension fund has invested until recently in crypto-related companies as opposed to cryptocurrencies — Coinbase rather than, say, Bitcoin (BTC) — isn’t uncommon, either. U.S. institutional investors surveyed by Fidelity Digital indicated a greater propensity for digital asset investment products rather than direct ownership of cryptocurrencies, Sandler told Cointelegraph, adding:“From our study, we also know that pension funds and defined benefit plans, like many other institutional investor segments surveyed, favor active management of an investment product containing digital assets.”More pension funds may now travel this road. “We’ve started to see participation not just from the hedge fund segment, which we’ve long seen participation from, but now it’s recently from other institutions, pensions and endowments,” Michael Sonnenshein, CEO of Grayscale Investments — the largest manager of digital assets — told Bloomberg earlier this year, adding he anticipated that pension funds and endowments would drive much of his investment firm’s future growth.Even pension-fund giants like the California Public Employees Retirement System (CalPERS) have dipped a toe in the crypto/blockchain sea. CalPERS invested in Bitcoin mining firm Riot Blockchain LLC some years back and has since raised the stake to about 113,000 shares — worth about $3 million in early October — though that is minuscule compared with CalPERS’ $133.3 billion in equity assets under management, as of its 13F filing in August. How much is enough?What sort of crypto allocation is appropriate for a pension fund today? Jim Kyung-Soo Liew, assistant professor at Johns Hopkins University’s Carey Business School, co-authored one of the earliest academic papers on crypto and pension funds back in 2017. That paper found that a 1.3% Bitcoin allocation would be “optimal” to fully reap the cryptocurrency’s diversification benefit. What is appropriate today? “Going forward, an institutional investor should be looking at a 10%–20% allocation,” Liew told Cointelegraph, and he expects large pension funds to be investing as much as one-fifth of their total assets in the crypto/blockchain space within the next three to five years.98% of retirement accounts in the US can’t access #Bitcoin. That’s $36,800,000,000,000.What happens when they do?— Dan Held (@danheld) October 7, 2021“We’ll see more institutional investors,” Liew said, adding, “Their horizons are long.” Today’s $2 trillion in cryptocurrency market capitalization could swell to $20 trillion in the next three to five years, he added, assuming a favorable regulatory environment.Asked if this doesn’t fly in the face of pension funds’ traditional conservatism, Liew answered, “Pension funds have boards; they have investment committees,” and yes, “they’re often accused of being overly conservative and wanting to understand things 100% before acting.” From an education standpoint, it will take some time and effort to bring them along, but chief investment officers are quite intelligent as a group, and they will be able to grasp the concepts, Liew said. One problem, he allowed, “They’re not rewarded for risk-taking.”Obstacles remainThere may be other impediments. “One challenge is that pensions tend to require large tickets,” McKeon told Cointelegraph, “so the space had to mature a bit to accept that amount of capital. As funds continue to scale up, we expect to see more participation by pensions.” Volatility remains a concern, said Sandler, pointing to data: “‘2021 Institutional Investor Digital Assets Study’ found that 73% of U.S. pension funds, defined benefit plans, and endowments and foundations surveyed cited volatility as the top barrier to adoption.” U.S. pension funds and defined benefit plans still hold a fairly negative view of digital assets, according to the survey, “but I think we’ll continue to see that negative perception decrease as the market continues to mature and these investors get more comfortable with the technology, infrastructure and channels for exposure and have a more fully developed investment thesis about these assets,” she added. As such, pension funds, like other institutional investors, are striving to find investment opportunities. As The New York Times noted, “U.S. Treasuries have been the bonds of choice for safe retirement income. But they could deliver no real return for the next decade.”Related: The long game: Institutional interest in crypto is just getting startedMeanwhile, on the positive side, pension funds have long horizons, and they can withstand short-term volatility. Another plus, “Crypto talent is spread uniformly around the world, and we can source that talent,” Liew added.Fiduciary constraints won’t disappear, of course. Many pension funds represent municipalities, and they are holding many people’s late-life financial well-being in their hands. That’s a lot of responsibility. But you “can’t get a ton of reward if you don’t take on some risk,” Liew said.A while back, the president of Molnar’s board said, “I understand the need to do this” — the police officers’ pension fund, like most institutional investors, was struggling to grow its money in a continuing low-interest-rate environment — but some officers “are off the reservation,” he claimed. With the fund’s recent 7.25% rate of returns on its crypto investments, it’s probably safe to assume that some of those officers are back on the reservation now.

Bank of Russia Lists Crypto Companies Among Financial Pyramids

Bank of Russia Lists Crypto Companies Among Financial Pyramids

The Central Bank of Russia has recently expanded its database of financial market players suspected of illicit activities. Several crypto companies have been added to the list along with entities bearing signs of Ponzi schemes, as well as illegal credit organizations and forex dealers.
Central Bank of Russia Blacklists Crypto Platforms
As part of its monitoring of the financial sector, the Central of Russia (CBR) regularly identifies illegal financial services providers and warns Russian investors about fraudulent platforms. This week, the regulator added another 105 companies to its growing list of businesses showing “signs of illegal activities in the financial market.”
Among the new entries, the monetary authority has blacklisted a number of crypto companies. Most of them have been classified as resembling financial pyramid schemes. Bitflows, Bitkoresh, Bittrex-global, Crypto Invest Club, Idleminer, Miners Capital, and Money Miner fall under this category. Another entity, Bitford, has been designated as an “illegal professional participant in the securities market.”
The bank reminded the public that in order to offer most financial services in the Russian Federation, providers are required to obtain a license from the central bank or register with the regulator. “If this condition is not met, then, most likely, the organization operates illegally, and consumers can be deceived,” the authority says while also warning it’s not obliged by current law to compensate victims of illegal platforms.

Last month, Bank of Russia blacklisted three entities — To The Mars, To The Moon, and TTM Group — linked to the promotion of the Finiko crypto pyramid. Financial damages attributed to the Ponzi scheme, one of the largest in modern Russian history, amount to $4 billion, according to independent estimates quoted by Forklog. A report by Chainalysis revealed the pyramid received over $1.5 billion worth of bitcoin in less than two years before it collapsed this summer.
CBR blacklisted Finiko in February and a batch of 15 cryptocurrency projects was added in June, the crypto news outlet noted. “To suppress illegal financial activities, the Bank of Russia takes measures to block the websites of such companies, and also interacts with law enforcement and other authorized bodies, foreign regulators to apply other measures,” the authority explained.
The Central Bank of Russia has continuously opposed the adoption of cryptocurrencies, issuing multiple warnings for investors. Last week, its Deputy Chairman Sergei Shvetsov stated the bank would not support increasing access to crypto markets, insisting cryptocurrency is “highly risky and has signs of a pyramid scheme.” Earlier in September, the regulator recommended banks block cards and wallets used to transact with crypto exchangers, and in July, CBR advised Russian stock exchanges to avoid trading crypto instruments.
Do you think Bank of Russia is treating companies involved in the crypto space equally? Share your opinion in the comments section below.

Tags in this story

Authority, Bank, Bank of Russia, Blacklist, CBR, Central Bank of Russia, Crypto, crypto businesses, crypto companies, crypto platforms, crypto projects, Cryptocurrencies, Cryptocurrency, financial pyramids, Finiko, forex dealers, Fraud, investment, investment scheme, Investors, Monitoring, Ponzi Schemes, pyramids, regulator, Russia, russian, Warning

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Read disclaimer

Deutsche Boerse-owned Eurex debuts Bitcoin futures trading

Deutsche Boerse-owned Eurex debuts Bitcoin futures trading

Eurex, a derivatives exchange owned by German stock market operator Deutsche Börse, has debuted cryptocurrency derivatives trading with ETC Group’s Bitcoin (BTC) exchange-traded note (ETN) futures product.Eurex officially announced Monday the launch of the Bitcoin ETN Futures contract developed by London-based crypto derivatives issuer ETC Group.“As the first step in our portfolio of crypto derivatives, the offering is the first regulated market in Bitcoin-related derivatives in Europe,” Eurex said.Trusted path to #crypto: today, we launched #Bitcoin ETN #Futures. As the first step in our portfolio of #CryptoDerivatives, the offering is the first regulated market in Bitcoin-related #derivatives in Europe. Get all information and the factsheet here: https://t.co/bk55yqFssN pic.twitter.com/ADpzOCqTnm— Eurex (@EurexGroup) September 13, 2021The euro-denominated Bitcoin ETN Futures contract is based on ETC Group’s flagship product, centrally cleared Bitcoin exchange-traded product (ETP), known as BTCetc Physical Bitcoin (BTCE). The futures contract allows investors to track the price development of Bitcoin in a regulated environment and will be physically delivered in BTCE, which is 100% backed by Bitcoin and can be instantly converted by any investor into the underlying BTC.ETC Group CEO Bradley Duke noted that the latest listing marks another major milestone in providing institutions with financial products that enable exposure to crypto on regulated exchanges. “The selection of BTCE by Eurex, Europe’s largest derivatives exchange, further establishes ETC Group’sleadership in the crypto ETPs and is recognition of the quality of our products and their world-beating liquidity,” he noted.Related: Swiss Exchange SIX granted approval to launch crypto marketplaceThe Bitcoin ETN Futures’ listing on Eurex comes more than a year after ETC Group listed its BTCE ETP product on Xetra, a major digital stock exchange operated by Deutsche Borse. The ETP is now listed on multiple European exchanges, including the SIX Swiss Exchange. In July, ETC Group announced that BTCE was going carbon neutral by offsetting the carbon footprint through hand-selected carbon credits to compensate for carbon emissions associated with BTCE Bitcoin mining.

Fidelity Survey: 9 Out Of 10 Investors Find Digital Assets Appealing

Fidelity Survey: 9 Out Of 10 Investors Find Digital Assets Appealing

Fidelity Digital released a survey report recently displaying substantial growth in a number of categories surrounding digital assets. Across Europe and the U.S., year-over-year growth existed in almost every category, which includes current exposure and perception and appeal.
Let’s take a deeper dive into the survey and some of it’s takeaways.
Crypto Catalysts: Fidelity’s Findings
The 40-slide report outlines survey insights from over 1,000 respondents in Europe, Asia, and the U.S. between December 2020 and April 2021. Respondents included financial advisors, high-net-worth investors, hedge funds, family offices, endowments and foundations, and the like. Roughly half of the surveyed investors already had an investment in digital assets, with Asia and Europe showing higher rates of investment than the U.S.
70% of all surveyed investors had a neutral-to-positive perception of digital assets, and nine out of ten respondents said that they found digital assets to be appealing. Furthermore, roughly eight out of ten surveyed investors felt that digital assets have a place in a portfolio.
What assets are investors targeting? Surprisingly, only 21% of surveyed U.S. investors own bitcoin, compared to 46% of surveyed investors in Europe and 45% of surveyed investors in Asia, respectively. Surveyed U.S. respondents also showed lower indexed crypto holdings of other major tokens as well, including ethereum, litecoin and XRP. Nonetheless, adoption continues to increase basically across the board year-over-year, with U.S. family offices and financial advisors seeing the largest upticks in adoption.

Bitcoin’s strength is typically seen as the anchor for crypto’s broader growth and is quickly becoming the pillar of formal investment options as crypto ETFs come to life. | Source: BTC:USD on TradingView.com
Related Reading | Forget Walmart, Here’s The Real Reason Why Bitcoin Crashed
What’s Holding Respondents Back?
The biggest points of crypto skepticism from Fidelity’s survey participants seemed to lie in crypto’s inherent volatility and mysticism. Over half of the surveyed investors cited price volatility as “one of the greatest barriers to investment.” And nearly half of the survey respondents said that a lack of fundamentals to gauge appropriate value was a barrier to entry as well.
Furthermore, while questioning around the topic was limited, tokenization showed weaker enthusiasm relative to Fidelity’s previous survey. Only around a quarter of U.S. and European investors surveyed believed that real estate has great potential for tokenization, which was a twelve percent decrease from the last survey.
Despite these reservations, the survey shows substantial optimism through-and-through. Over double the respondents in the U.S. said that they bought or invested in digital assets through an investment product compared to the prior year. As more formalized investment products come to market, it’s reasonable to expect this number to continue to grow.
The reports comes just a few short weeks after Fidelity Digital’s ambitious future price target for BTC. Just a couple months ago, Fidelity Digital bolstered it’s workforce by 70% due to an increase in demand.
Related Reading | Ukraine Adopts New Law To Legalize Bitcoin And Other Cryptocurrencies

Featured image from Pexels, Charts from TradingView.com

BREAKING: Coinbase plans to raise $1.5B via debt offering

BREAKING: Coinbase plans to raise $1.5B via debt offering

Coinbase, the largest cryptocurrency exchange in the United States, is planning to raise $1.5 billion via a debt offering, the company officially announced Monday.The Nasdaq-listed crypto exchange is looking to use the capital raised to further grow the company’s balance sheet for general corporate purposes as well as potential investments and acquisitions of other companies, products or technology, Coinbase said. The closing of the offering is subject to market and other conditions, the firm noted.The new raise specifically aims to offer a $1.5-billion aggregate principal amount of the company’s senior notes due 2028 and 2031, which will be fully guaranteed by Coinbase Inc., a wholly-owned Coinbase subsidiary acting as its holding company. The interest rate, redemption provisions and other terms of the raise are subject to negotiations between the firm and initial purchasers.Coinbase noted that the notes and the related guarantee would be only offered and sold by means of a private offering memorandum to persons “reasonably believed to be qualified institutional buyers” under local securities laws as well as outside the United States.“Neither the notes nor the related guarantee have been, or will be, registered under the Securities Act or the securities laws of any other jurisdiction, and unless so registered, may not be offered or sold in the United States, except pursuant to an applicable exemption from such registration requirements,” Coinbase added.Related: Regulatory and privacy concerns trail SEC’s threat to CoinbaseThe news comes amid Coinbase facing increased attention from securities regulators, with the U.S. Securities and Exchange Commission threatening to sue the exchange over its upcoming crypto lending program last week. Coinbase CEO Brian Armstrong pointed out that there are a number of other crypto firms on the market that currently provide similar lending services to their customers.Facilitating over $5.6 billion in daily trading volumes, Coinbase is one of the world’s largest cryptocurrency exchanges. The company previously planned to raise $1.25 billion through a private debt securities offering in May 2021, shortly after going public with a direct listing on Nasdaq in mid-April.

MicroStrategy doles out $240M on additional Bitcoin purchase

MicroStrategy doles out $240M on additional Bitcoin purchase

Business intelligence outfit and corporate Bitcoin (BTC) whale MicroStrategy has increased its BTC ownership with the additional purchase announced on Monday.MicroStrategy CEO Michael Saylor announced the purchase of 5,050 BTC for about $242.9 million at an average of $48,099 per coin.In a Form 8-K filing with the United States Securities and Exchange Commission published on Monday, MicroStrategy stated that it had added 8,957 BTC to its corporate Bitcoin treasury in Q3 2021.As previously reported by Cointelegraph, MicroStrategy recently bought 3,907 BTC at the cost of about $177 million between July 1 and Aug. 23.Following the latest Bitcoin acquisition, the company now holds about 114,042 BTC acquired at an aggregate purchase cost of $3.16 billion. Given the current BTC spot price, the company’s Bitcoin holdings are valued at over $5 billion.According to the Form 8-K document, MicroStrategy’s Bitcoin cost comes down to about $27,713 per BTC, including fees and sundry expenses.The additional 5,050 BTC purchase is yet another indication of its intention to expand its Bitcoin position. Despite paper losses on its Bitcoin investment in Q2, MicroStrategy has stated its Bitcoin appetite remained unaffected.Related: Insiders sold MicroStrategy stock after Bitcoin’s bull runSince announcing its maiden BTC purchase back in August 2020, the business intelligence company has bought more Bitcoin becoming the largest corporate holder of the largest crypto by market capitalization among publicly traded firms in the United States.Saylor has also become a prominent Bitcoin proponent, regularly encouraging other U.S. firms to add BTC to their balance sheets.Monday’s purchase announcement comes amid a price decline for Bitcoin, with BTC down almost 3% in the last 24-hour trading period.The total cryptocurrency market capitalization is down more than 4% as token prices slipped on Monday.

Across the seven seas: Retail, institutional investors keen on Bitcoin

Across the seven seas: Retail, institutional investors keen on Bitcoin

Institutions have been at the forefront of the crypto bull run seen since Q4 2020, but now retail investors have been taking the center stage as well. Bitcoin (BTC) is getting more popular all around the world and it officially became a legal tender in El Salvador on Sept. 7, making it a landmark event for retail and sovereign adoption of the asset.However, it turned out to be a chaotic event for the premier cryptocurrency token as the country celebrated “Bitcoin Day.” Soon after the day began, BTC’s price suffered a flash crash of over $8,000 to bottom out at $42,900. Even though this flash crash coincided with this major adoption event for the token, its significance for retail consumers and investors far outweighs the short-term price impact seen in the token’s price.Interesting developments have followed in the aftermath as Fidelity Investment director Jurrien Timmer called this adoption a coming of age for the asset similar to gold in the sixties. Within the Latin American country, global food and beverage brands like McDonald’s, Starbucks and Pizza Hut have now started accepting Bitcoin as a payment option for their products. Large-scale adoption by brands like these is bound to push retail interest in Bitcoin and cryptocurrencies as a whole to new heights, as now it is becoming more evident that there are real use cases for digital currencies. The founder of Cardano and co-founder of Ethereum, Charles Hoskinson, even predicted that many more countries would eventually follow suit to El Salvador’s adoption. Along with him, whistleblower Edward Snowden also lauded this move on Twitter, mentioning that the pressure is now on competing nations to acquire Bitcoin “even if only as a reserve asset.” Even if major global economies start considering the adoption of BTC as legal tender, it will give a huge boost to retail usage.Bitcoin adoption by El Salvador has been a big part of the mainstream hype and narrative on cryptocurrencies at the end of the summer. Especially for retail investors, it often could become a case of FOMO (fear of missing out) which, due to the consistent gains of BTC throughout the year, often regret not buying the token a certain number of months ago. This could lead to a huge influx of funds from retail traders in the aftermath.Retail investors have an eye on cryptoA survey conducted by the Association of Forex Dealers (AFD), a regulatory organization for the foreign exchange market, attempted to gauge investor sentiment on digital currencies in Russia. The results of the survey revealed that 77% of the 502 investors that participated preferred cryptocurrencies like Bitcoin, Ethereum (ETH) and Litecoin (LTC) to traditional financial assets like gold and forex.Cointelegraph discussed more on this comparison with gold with Jaime Rogozinski, founder of WallStreetBets, a subreddit group made for retail investors. He said, “gold is synonymous with store of value in the U.S., which holds nearly three times more gold than the next three countries combined, but global investors have the opportunity to level the playing field with BTC’s emergence and boundless potential.”Rogozinski also mentioned that all the other participants in the global economy, apart from the U.S., have an interest in the U.S. Dollar and gold losing the financial hegemony that assets currently hold. Comparing the performance of gold and BTC, there is a vast difference in the results. In the short term, BTC has posted 62.76% gains year-to-date (YTD) and 351.62% yearly gains, while gold has posted 5.79% losses YTD and 7.91% losses yearly.In addition to Russia, even India is witnessing millennials shifting their interest to cryptocurrency during the global COVID-19 pandemic. Nischal Shetty, CEO of WazirX, an Indian cryptocurrency exchange, told Cointelegraph that in the global perspective, institutional participation has paved the way for retail interest in cryptocurrencies: “The pandemic had an equal or maybe greater contribution in accelerating crypto adoption, especially in countries like India. In such uncertain times, crypto has provided common people with new ways to earn online whether they are from urban or rural areas.”According to data provided by WazirX, the exchange has witnessed a 2,648% increase in users signing up from Tier-II and Tier-III cities in India. Users from these two segments of cities are responsible for 55% of the user signup growth in 2021, even outpacing Tier-I cities that showed a growth of 2,375%. Furthermore, 70% of the platform’s users are below the age of 35.Perhaps echoing the surge in interest is the U.S.-based cryptocurrency exchange CrossTower announcing that they would be expanding their operations to India and “use the country as a hub to expand into other geographies.”In a country of 1.36 billion people with more than 65% of them being under the age of 35, i.e., over 880 million, the potential for the market to grow further is humungous. Data from blockchain analytics provider Chainalysis showed that the amount of funds Indians have invested in cryptocurrencies had grown 600% from $900 million in April 2020, to $6.6 billion in May 2021.Related: Dreading September? Bitcoin price hopes to break the slump trendA report by Chainalysis attempted to rank countries by their level of retail adoption using a metric known as the Global Crypto Adoption Index. Using this metric, the report found that Vietnam ranked number one and India ranked number two, with Pakistan, Ukraine and Kenya following closely behind.For Vietnam, confirmation of the adoption in tandem with this metric is evident by taking a closer look at the trading volumes and number of users in the country. According to the data provided to Cointelegraph by the Binance Research team, the total number of Binance users and trading volumes across all the cryptocurrency pairs offered in Vietnam have jumped by an average of 288.51%, and 235.66%, respectively from Jan to May 2021. To compare with this growth, Vietnam’s gold reserves only increased by 3.37% in the same period.Rogonzinski further opined on how the institutional interest impacts retail investors, saying, “Institutional investors can afford to weather Bitcoin’s dips and have more of an eye toward long-term gains, but I have faith that each bull run succeeds in bringing more retail investors into the market and hopefully teaching them to HODL.”Retail brings numbers, institutions bring movementsAn industry analysis report by cryptocurrency exchange OKEx in collaboration with on-chain data provider Catallact revealed that despite the growth of the small BTC addresses (holding less than 10 BTC), retail investors have had a relatively smaller contribution to the overall transaction pool in Q1 2021.Data provided to Cointelegraph by Binance Research outlines that when looking solely in terms of the BTC trading volume, the recovery in BTC’s price and interest levels could be due to the combination of retail and institutional investors. Between June 2021 and August 2021, Binance witnessed a 3.29% and 1.36% increase in the number of retail and institutional investors respectively. In line with this number, the total number of BTC traded by retail and institutional investors on the exchange grew 4.61% and 3.99% respectively. In the same period, the overall BTC trading volume grew by 1.98%.The chart represents how an increase or decrease in the retail and institutional investors trading BTC on the platform is aligned with the movement of the overall BTC volume. The representative from Binance’s research team further said: “This shift in investor mindset from traditional assets like gold or forex to crypto is definitely not confined to developing countries. In fact, it is also prevalent in more developed countries where the sentiment of favoring crypto investments is seen more as a move to gain exposure to the emerging asset class, as opposed to just a store of value or hedge against inflation.”While discussing with Cointelegraph, co-founder of Huobi Global cryptocurrency exchange Du Jun pointed toward the Bitcoin balance on all exchanges as a metric to gauge the institutional involvement in the market. According to the data from Glassnode, the amount of Bitcoin held in exchange wallets bottomed out at 2.48 million this year, adding further: “Bitcoin balances on Coinbase dropped to about 700,000, the lowest level recorded throughout the year. Over the past month, mainstream exchanges have seen net Bitcoin outflows.”As most institutions use Coinbase to invest, Jun inferred that institutions have purchased more BTC over the past month. He also mentioned that large banking institutions like Rothschild and Morgan Stanley have increased their exposure to crypto assets through their holdings in the Grayscale Bitcoin Trust (GBTC).Institutions investing in Bitcoin or getting into digital currencies as a payment mechanism are still at their nascent stages. Thus, the untapped potential for its proliferation of cryptocurrencies into retail investors is served well by being spearheaded by institutional investors, as it gives retail investors a sense of security, along with the upside potential that the hype of crypto markets captures.

Back to top