📝 Wide Adoption 📝
Here they talk about how the crypto markets has evolved. You can see how Bitcoin has gone from a new nascent technology to a form of currency that is widely acknowledged. They raise a point about the potential for governments to ban or limit the spread of bitcoin. They cite an HSB report that at least 36% of SME businesses in the US accept Bitcoin. They talk about some of the most recent corporate purchases of Bitcoin that have raised a few eyebrows.
🕴 Institutionalization 🕴
This is mainly related to the transformation of Bitcoin away from the argument of “medium of exchange” to that of a digital gold. They also went over the massive growth that we have seen for OTC dealers in the space. According to the report, they have now gone almost electronic and the spread on these trades has gone down from 50 to 200 basis points to 5 to 10. Another really interesting trend that they point to is the rapid expansion of custody services. A number of different banks and asset management firms are offering custody solutions.
👨⚖ Regularity Clarity 👨⚖
There are a number of US regulatory issues that they think are likely to shape the narrative this year. – The Financial Action Task Force travel rule – The Securities Exchange Commission Cryptocurrency Custody Letters – The Office of the Comptroller of the Currency (OCC) Interpretive Letter on Banks Using Blockchain Networks for Payments
📈 Broader Market Trends 📈
They talk about the increasing liquidity in the Bitcoin market and larger depth. As I mentioned above regarding OTC trading, increasing depth & liquidity means a more friendly environment for institutions. There has also been crazy amounts of volume taking place here. In fact, in early 2021, the folks over at Crypto Quant noted that the number of transactions between all addresses and exchanges was on a down trend. The large centralised exchanges have also seen an explosion of volume over the past year. They are at levels that have not been seen since 2017. Another really interesting trend is the decline in the “Grayscale” premium. This shows that the market is becoming more mature.
😨 Potential Risks 😨
One of the most often overlooked barriers to entry for institutional investors is the lack of capital efficiency. All trading and financing is pre-funded and all lending is over collateralised. Another challenge that they mention is the concerns around insurance and custody. Sure, there are a range of custody solutions currently that are serving the market, but they still don’t suit a lot of investors. Then of course we have the never ending questions around Tether as well as concerns around the risks that Bitcoin poses to the environment through mining.
📜 Disclaimer 📜
The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Trading Forex, cryptocurrencies and CFDs poses considerable risk of loss. The speaker does not guarantee any particular outcome.