TronWeekly

Crypto World News

You are here: Home / Archives for Institutional Investors

Institutional Investors

Coinbase Initiates Game-Changing Institutional Crypto Lending Service

by

Coinbase has embarked on an innovative venture that could potentially revolutionize the cryptocurrency landscape for major players. The digital asset exchange has introduced a groundbreaking cryptocurrency lending service specifically tailored to institutional clients within the United States. Through this offering, users have the opportunity to lend funds to Coinbase, primarily in the form of cryptocurrency assets, in exchange for collateral that exceeds the loan’s value.

This over-collateralization mechanism serves as a robust safeguard, effectively mitigating potential losses and bolstering security. In a strategic move, Coinbase can leverage this collateral to provide secured loans to its institutional trading clientele, mirroring the prime brokerage services traditionally offered by banks.

Notably, the company successfully secured $57 million in funding for this initiative, as detailed in a filing submitted to the U.S. Securities and Exchange Commission on September 1.

This latest offering by Coinbase marks a significant departure from a previous endeavor in 2021 when the exchange experimented with a lending program targeting retail customers. However, regulatory challenges and objections from the SEC led to the program’s abandonment.

In stark contrast, the new lending service, tailored for institutional participants, faces less stringent regulatory restrictions, driven by the belief that these entities possess the requisite resilience to navigate potential risks effectively.

Coinbase’s Future Endeavor Reveal

Coinbase’s strategic move is particularly timely, given the void created by the challenges faced by prominent firms like Genesis and BlockFi. Both of these industry giants previously offered similar lending services within the U.S. crypto market but encountered substantial losses last year, ultimately leading to bankruptcy proceedings, whether in full or in part. A spokesperson from the exchange commented on the development, stating,

With this service, institutions can opt to lend digital assets to Coinbase under standardized terms, qualifying for a Regulation D exemption. It is committed to modernizing a financial system built over a century ago, harnessing the power of crypto to expand economic freedom and opportunity. To advance this mission, Coinbase is diligently constructing the most trusted suite of crypto products and services while fostering collaboration to bring one billion people into the world of crypto.

Meanwhile, Coinbase’s founder, Brian Armstrong, revealed that he received over 150 project applications for the ten promising ideas previously proposed. Armstrong has also announced the addition of an eleventh startup idea: a Web3 iteration of LinkedIn that verifies employment or credentials through company-issued soul-bound NFTs.

Bitcoin [BTC] sees a ‘decisive turnaround’ in sentiment; Etheruem [ETH] not far behind

by

The 2020-21 bull run was fueled by wealth managers, and institutional investors entering the Bitcoin [BTC] and the cryptocurrency market. Institutional investors are turning back to Bitcoin which coincided with the steady market recovery. This was revealed by CoinShares’ latest “Digital Asset Fund Flows Weekly” which stated that BTC investment products have recorded a third consecutive week of inflows.

The report revealed that BTC’s investment product saw inflows of a whopping $69 million last week. Zooming out, digital asset investment products saw inflows of US$90 million during the same time. This marked the seventh consecutive week of inflows adding up to a total of $411 million.

According to CoinShares, the “decisive turnaround” in sentiment could be due to the rising confidence in the asset class amongst the market players. Another reason for the renewed trend could be due to more flexible statements from the US Securities Exchange Commission [SEC] and the Federal Reserve.

Ethereum [ETH] is gaining favor over Bitcoin [BTC]

While Bitcoin continues to enjoy its position as the market leader, Ethereum [ETH] is also gaining traction at a rapid pace. After a brutal month of September, institutional investors have resorted to broadening their horizons. As a matter of fact, these high-profile market players are slowly diversifying their portfolio and shifting their focus away from Bitcoin and have turned to Ethereum [ETH].

As per CryptoCompare’s Data Asset Management Review for September, institutional investors are looking for a more favorable position on the world’s largest altcoin.

It was observed that assets under management [AUM] for BTC have plunged by 7.8% last month, thereby, dragging the total amount of BTC AUM to a little over $35 billion. According to the historical data, the latest figure is the lowest that Bitcoin AUM had ever been in a five-month period.

The same cannot be said for Ethereum. CryptoCompare also reported that Ethereum-based products have not followed Bitcoin’s decline. In fact, these products have increased as big money flowed into them. Additionally, Ethereum went on to register its highest market share of total AUM for crypto at approximately 26%.

‘Aave Pro’ gears up to onboard institutional investors in DeFi

by

The prominent decentralized finance [DeFi] money market, Aave, is preparing for the launch of its “pro” version dubbed “Aave Pro,” a permissioned platform for institutional investors sometime in July. Stani Kulechov, the founder of the platform had first teased about the professional version two months back.

According to the announcement, Aave Pro would enable the entry of institutions, fintech, and the corporate world to access decentralized finance grade yields on the platform after certain criteria are met.

Besides, right after the development, the protocol’s native token AAVE noted a fresh uptick despite a market-wide dull price action. It jumped by 30% weekly, which drove its price above $266 at the time of writing. It was the fourth-largest DeFi token with a market cap of $3.38 billion and a 24-hour trading volume of $481 million.

What does Aave Pro entail?

A DeFi trader also shared a screenshot of the email sent out by Aave which revealed that the Pro platform leverages tested and audited V2 smart contracts. Only participants with proper Know-Your-Customer [KYC] verification will be allowed to access its pool. Initially, the launch will introduce support for just four assets – Bitcoin, Ethereum, USDC, and Aave, due to institutional demand. Additionally, the liquidity pools of Pro will be kept separate from that of the regular liquidity pools of the decentralized lending protocol.

Eventually, the platform also intends to decentralize the governance of Aave Pro.

It also stated that the Pro edition will be launched in collaboration with digital asset and settlement Fireblocks. The custodian service provider had previously partnered with DeFi platform Compound to enable high-profile market players such as institutions like market makers, hedge funds, and exchanges to access DeFi features via the lending platform.

Meanwhile, this news comes at the heels of an ongoing lawsuit against the security platform by StakeHound. The latter had sued Fireblocks over the alleged deletion of private keys to a wallet that had 38,178 ETH, equating to more than $72 million at the time.

3 reasons why Bitcoin [BTC] can rebound despite dull market conditions

by

Bitcoin [BTC] underwent a swift recovery, after topping out a little below $40k. The ongoing downside price action has left the investors concerned.

The latest side-way movement of price had taken shape since the dramatic fall in May and has extended to the new quarter as well. The drop was so damaging that it ended the winning streak for the digital asset which witnessed its prices surge above $60,000 for the first time in its decade-long history.

However, this trend could potentially come to an end as institutional players could soon push the asset’s price higher. Here are three reasons why a potential uptrend could be right in the inkling:

Institutional players’ comeback

One of the major recurring narratives for Bitcoin has undoubtedly been the Institutional adoption for both 2020 and 2021. While the entry of these players boosted the price of the token, after Tesla’s latest actions, institutional adoption seems to have taken a hit considerably.

But according to a key member of the crypto-analytic platform, Santiment, the price of the king coin can potentially continue to range until mid-July this year, before the institutional players in the market drive the new BTC resistance level up to $40k. The analysis also read,

“When you are enjoying yourself in the rain [especially when you were a child]. You lose track of all time. Bitcoin price is experiencing the same thing for this month.”

June-December 2019 Resemblance

The resemblance of Bitcoin’s current price action to that of June-December 2019 is uncanny. In fact, the flagship crypto-asset had surged all the way above the $14k in the last week of June 2019. Shortly after which it spiraled down as FUD entered the market in the form of Bitcoin Cash [BCH] hard fork, the then US President Donal Trump’s take on the token among other news.

Six months later, Bitcoin slashed over half of its gains and turned down to $6.5k. As a result of the decline, the charts saw death cross formation. However, as bulls bought the dips, Bitcoin recovered and slowly formed lower highs surging briefly to $10k.

Coming down to the present scenario, the latest trend could suggest a similar profit-taking phase, and a period of FUD that was sparked by Elon Musk’s announcement, China’s clampdown on cryptocurrency activities, etc.,

Grayscale Bitcoin Trust

Many well-known cryptocurrency analysts are of the opinion that the Bitcoin market could get a lift in July from the expiration of investor restrictions on the sale of shares in the Grayscale Bitcoin Trust [GBTC], and not downward pressure as earlier reported by JPMorgan strategists.

One of the main possibilities that some market speculators see is the foray investors to the coin market to buy BTC and repay crypt loans used for the purpose of financing their original purchases of the GBTC shares. Meaning, that while selling GBTC shares does not eliminate the risks of deeper discounts that could potentially ward off capital inflow, but, this adversary can be compensated by the repurchases of the cryptocurrency in the spot market.

Along the same line, Amber Group, the digital asset service provider tweeted,

“Lots of bearish chatter around GBTC unlocks whilst conveniently ignoring that in-kind subscriptions funded by debt will ultimately translate into spot buying,”

Miller Value Fund Files With SEC To Buy Bitcoin Via GBTC Trust Fund

by

Bitcoin’s adoption is rising and several new institutions are jumping the bandwagon to reap profits out of the world’s flagship cryptocurrency. BTC Trusts have become wildly popular as it paved the way to ride the growth of the crypto markets by gaining indirect exposure to the crypto-asset.

In the latest development, the asset management fund, Miller Value Fund is all set to enter the cryptocurrency realm.

According to reports, Bill Miller’s investment trust has filed with the US Securities and Exchange Commission [SEC] seeking investment exposure to BTC indirectly by investing in the Grayscale Bitcoin Trust.

The company’s official filing, which was released this week, entailed extensive discussions on the cryptocurrency and also stated that their ‘Opportunity Trust Fund’ is getting into BTC.

The edit explained

“The Fund may seek investment exposure to BTC indirectly by investing in the Grayscale Bitcoin Trust, an entity that holds BTC. Grayscale Bitcoin Trust is a privately offered investment vehicle, the shares of which are also available over-the-counter. BTC is a digital commodity that is not issued by a government, bank, or central organization.”

The official filing also disclosed that the firm is looking for a 15% exposure via the GBTC trust fund and would stop purchasing once the said cap is reached. Noting the same, Ben Miller’s Trust further detailed,

“BTC has no physical existence beyond the record of transactions on the Blockchain. The Grayscale Bitcoin Trust invests principally in bitcoin. The Fund will not make any additional investments in the Grayscale Bitcoin Trust if, as a result of the investment, its aggregate investment in bitcoin exposure would be more than 15% of its assets at the time of investment.”

A quick primer: The Miller Value Partners has $3.5 billion in assets under management [AUM] is essentially operated by Bill Miller, a veteran investor and asset manager.

Miller has been a BTC investor for quite some time now. The news came hours before he penned down a letter touting the premier cryptocurrency as a growing investment. However, the latest announcement will be the company’s first tryst at managing a BTC portfolio for a publically traded fund.

Bitcoin’s Red-hot Rally Comes To Halt; What’s Next?

by

Cryptocurrency proponents anticipated Bitcoin to reclaim its fort above $40,000. However, the crypto-asset has been facing quite a stiff resistance at this level. Despite many in the community, counting for the token to bounce back, it has now entered a consolidation phase preceding a few major dips.

So what is holding back the uptrend?

Bitcoin Under Institutional Exhaustion?

Reportedly, the momentum of flows into the $20 billion Grayscale Bitcoin Trust [GBTC] have topped up when four-week rolling averages are taken into consideration. Over the past two weeks, the fund took a plunge of more than 20% through the 22nd of January, which coincided with the significant double-digit pullback in BTC’s price.

The JPMorgan strategists led by Nikolaos Panigirtzoglou stated,

“At the moment, the institutional flow impulse behind the Grayscale Bitcoin Trust is not strong enough for Bitcoin to break out above $40,000.”

The strategists also went on to add that “risk is that momentum traders will continue to unwind BTC futures positions.” Despite the growing uncertainty, it can be safely said that Bitcoin’s latest rally is in no way similar to the 2017 mania that preceded a massive collapse.

Furthermore, data compiled by the crypto-analytics platform, Skew, revealed that the coin’s realized volatility has hit levels as high as March 2020. So what does this mean?

During bull runs such as this, price fluctuations involved with BTC are more normal. This is due to the fact that market participants often tend to cash out at different points. Hence, greater volatility in the crypto-asset’s value essentially means more the extent of the deviation from its average price something that is to be expected during the bull run.

It is also important to note that overall the volatility of Bitcoin has gone down significantly while its price and market cap risen over time. If this trend continues, it can be a much-needed respite for the investors who witnessed massive FUDs and selling spark erratic price movements.

Despite the cooling off institutional momentum, Raoul Pal, founder of Real Vision, predicted

“Feels like BTC is getting ready to climb the wall of FUD fear. Positive seasonality and a nice wedge give it a good chance to hit $50k by March.”

Bitcoin Dominance Exceeds 70%; Alt-Season Delayed?

by

Bitcoin shattered yet another price ceiling as it climbed to $27,800 after putting on an impressive rally which shows no signs of slowing down. The strong momentum has further boosted its dominance in the cryptocurrency market as it hit 70.73%.

What’s Holding back Altcoins?

So what happened to the much-anticipated alt-season? The world’s premier token noted a parabolic rise in terms of its value but the same cannot be said for the altcoins. The total altcoins market cap stagnated after a reluctant surge and has failed to mimic the 2017-like price action. What is causing the delay in the bullish advance?

It is important to understand that one of the crucial factors of Bitcoin ballooning above 70% market dominance was the sell-off triggered in another top altcoin’s market – XRP after the latest Ripple-SEC dispute.

With wild swings on the upside, Bitcoin is bound to face pullbacks. But historically, it was noted that it was during these times of pullbacks in Bitcoin that altcoins suffered extensive corrections. Yet another reason for the underwhelming performance in the altcoin market is Ethereum’s dull price action when compared to Bitcoin.

Ethereum Fails To Steer Way For Alt-Season

While Bitcoin was up by nearly 30% since its 2017 ATH, Ether, on the other hand, was still down by 50%. Some market experts are of the opinion that the “hopium” surrounding the revival of the altcoin market might not see the light of the day. The institutional focus on Bitcoin has been one of the major drivers of its price movement.

This is very much unlike the altcoin market which has been mostly explored by retail investors. This particularly holds true as when BTC extends its rally, there has been a prominent trend of retail investors investing sideways in a bid to increase their exposure to new and established altcoins.

This is what a well-known Bitcoin trader, TheBoot had to say about a potential alt-season:

“I don’t believe alts have viable uses, 99% of them. No, I do not think alts will ever see anything like 2017 again. Remember that $btc dominance would be significantly higher if not the never-ending altcoin supply increase. Index-based $btc dominance would be higher”

When Alt-Season?

It can be inferred that institutional investors have so far sidestepped altcoins. Adding to the market woes, was the uncertainty over the pandemic which led to the economy spur investments into Bitcoin. This has led to a delay in the much-awaited alt-season. It is only plausible that during these turbulent times, investors are placing their money on a safer bet, i.e Bitcoin and its counterpart will have to wait to gain a prominent foothold.

The Arrival and Introduction of Bitcoin Institutional Investors: Part 1

by

Bitcoin’s present is reminiscent of its 2017’s action. However, it is still completely different. The dynamics around Bitcoin has massively changed. There is a sense of stability surrounding the digital asset, which was largely absent three years back.   At press time, Bitcoin is just below $19,000 under its final resistance range.

After the inevitable step above, we’d be turning a new chapter in Bitcoin’s financial history. In order to understand the present and future interests, we will divide the explanation into two parts, in order to achieve a better market lucidity.

Bitcoin in 2020: Liquidity and Derivatives

Between 2017 and 2020, there are two clear distinctions. First, the supply of Bitcoin has increased from 16.77 million in January 2018 to 18.55 million at press time. That is an influx of 1.78 million BTC, currently valued at $32.28 billion. That is higher than every crypto asset’s market cap other than Ethereum.

The liquidity brought in by such a significant supply has led to the current explosive trading volume between on-ramp platforms. According to Skew’s recent data set, Bitcoin spot trades north of $500 million against the U.S dollar on exchanges like Coinbase, Kraken, Bitstamp, Gemini, LMAX Digital, and ItBit.

This brings us to the 2nd difference, which is self-explanatory after the above example; higher liquidity.

Another financial product associated with Bitcoin is BTC futures traded with high leverage on offshore platforms. The report added,

“It’s common to see days where they trade in total north of $10bln. CME bitcoin futures traded on average $500mln notional a day in the last three months. Most bitcoin futures contracts are cash-settled using BTCUSD and BTCUSDT spot indices.”

It is important to note that its market was completed non-existent in 2017 and developed above the existent spot market as well.

The Origin of Institutional Investors

The major inference that can be drawn from the above-mentioned rising interest is organic growth in this particular market. And here in the last few years, the institutional interest has begun to move at a rather real pace.

CME can be appreciated for its major role. Many high net-worth individuals have identified this parabolic incline in BTC futures, attracting high levels of cash and carry strategies, on its sport and futures platform.

However, this has definitely led to institutions whose capital is solely dependent on crypto assets, and they are basically “cash poor”. Since banks have been completely absent in this market, there has often been US dollar scarcity since 2017.

The next part of this article will describe the possible expectation of Institutional Investors on BTC and what possibly lies in the future. End of Part 1.

U.S Crypto: 72% of North America Favors Bitcoin; Only 11% Activity in Altcoin

by

The United States of America is undoubtedly one of the most active regions in the world in terms of cryptocurrency traffic. Although regulatory wise, the U.S government‘s stance is still not clear on crypto assets, volume-wise, U.S is one of the largest active nations.

Now, according to Chainalysis’s recent report, the North American region is only 3rd in the world in terms of crypto trading volume, behind the markets facilitated in East-Asia and Western Europe. U.S based addresses accounted for 14.8% of all crypto activity in the past 12 months and the report indicated that its market had an “extremely active” professional market. What it meant was that the transactions taking place in and out of the U.S were not for small amounts of capital.

As suggested in the above illustration, 90% of U.S digital assets transfer came from professional traders, which chainalysis categorizes as transactions worth over $10,000. The report added,

“Starting around December 2019, the share of North America’s total value transferred made up of transfers above $1 million rises from 46% to a high of 57% in May 2020. That corresponds with the jump in the overall professional market share of North America activity rising from 87% in December 2019 to a high of 92% in May 2020.”

Institutional Investors interest growth in the U.S

Aside from an active professional market, the growth of Institutional investors has also been gaining traction in the market. Fidelity Investments June 2020 survey listed that out of 800 accredited investors across the United States and Western Europe, around 36% were involved in digital currencies. The rest of the investors indicated their intrigue as well, with many suggestive that they could potentially add cryptocurrencies to their portfolios.

Fidelity’s very own Digital Assets Platform is also currently active in assisting institutional investors with their demand and crypto custody.

Bitcoin remains the most popular, followed by Stablecoins

Without a surprise, Bitcoin remains the poster boy of digital assets, as every major region involved with digital assets, were dominated with Bitcoin activity over other assets.

Surprisingly, Stablecoins took the 2nd place in the charts outperforming the huge collective of altcoins in the U.S market. The report added,

“Bitcoin makes up the biggest overall share of North American cryptocurrency activity, accounting for 72% of all transaction volume. Altcoins (not including stablecoins) make up just 17% of activity in North America, compared to 33% in East Asia.”

New Institutional Bitcoin Product on the Horizon as Bakkt Partners with Galaxy Digital

by

Digital asset custody and derivatives solutions provider Bakkt has partnered with digital asset manager Galaxy Digital to develop a new institutional bitcoin product. The new partnership will see Bakkt ‘s custodial services offered alongside the Galaxy Digital Trading (GDT) engine match and trading platform.

As per Bloomberg ‘s interview with John Conneely, head of Bakkt ‘s custody, the new collaboration was inspired by the growing institutional demand for bitcoin exposure. Moreover, Galaxy Digital will seek liquidity from more than 30 market markers and will be able to trade on its GDT platform 24 hours a day.  According to the Head of Sales at Galaxy Digital Trading, Tim Plakas:

“Asset managers and hedge funds considering this service can be assured by the high standards we hold as a publicly-traded company with audited, public financial statements and an institutional-sized balance sheet.”

New institutional bitcoin product will ease the growing institutional demand for BTC

Bakkt has been offering regulated bitcoin futures to clients since October of last year. Bakkt also offers institutional-standard custodial solutions for the secure storage of bitcoins dubbed Bakkt Warehouse.

On the other hand, Galaxy Digital, which is owned by Bitcoin enthusiast Mike Novogratz, offers a wide range of cryptocurrency financial solutions. The partnership between the two firms will see the best-in-class services offered by the two institutions come together to ease the growing demand for bitcoin exposure by major institutions.

 

 

Bottom line

Furthermore, Bakkt combines both cold and warm storage services to preserve crypto assets. The majority of the funds are stored offline, which guarantees more security from hackers than online storage. Notably, the crypto assets stored in Bakkt Warehouse are protected by a massive $125 million insurance policy, with clients able to buy over $500 million in extra protection.

The derivatives platform is also working on other significant projects, such as the development of a retail-oriented cryptocurrency mobile app. Some recently disclosed details of the mobile app show it has incorporated some other third-party crypto wallets and features.