After an unsolved year for cryptocurrencies, 2018 was extremely challenging – to say the least.
With Bitcoin and numerous altcoins touching all the highs in December, a reflecting market correction followed and markets started to settle midway
There have been many reasons why the cryptocurrency markets are been affected by bearish feelings across the board.
However, after passing the vote in the middle of the year, there are increasingly encouraging signs that institutional investors are changing their tune once again – suggesting that mainstream adoption is behind ;angle.
Moreover, Bitcoin reached market capitalization levels last time in December, with 46% of the total market dominated by the pre-eminent cryptocurrency. With its stable price of around $ 7,500, there are signs that a bear market could end.
Let's take a look at the greatest Wall Street players who seem to lay the groundwork for entering the large-scale encrypted markets.
Blackrock breaks out the shims
In July, Blackrock – the largest fund traded in the world (ETF) – announced that it has launched a working group to assess the potential of Bitcoin investments.
The inter-industrial working group is exploring a number of investment options, but it is clear that Bitcoin futures are on the agenda. In particular, it marks a change in Blackrock's feelings, considering that CEO Larry Fink had described Bitcoin as "a money laundering index" in October.
Blackrock's move could be described as a preemptive strike to avoid missing the cryptographic bus. Goldman Sachs is making progress with the involvement of cryptocurrency and Blackrock is following the example.
Although Blackrock would launch a blockchain working group in 2015, the latest move is examining what its competitors are doing in space. Clearly, everyone is trying to find out what their peers are doing in terms of cryptocurrency adoption.
Goldman Sachs – forging ahead
Since the end of 2017, there have been murmurs of the investment and the banking company that launched a cryptocurrency trading desk. This was later refuted by CEO Lloyd Blankfein, although he revealed that the company had invested in an encryption desk in 2015.
However, Goldman Sachs is making its way to encrypted adoption throughout the 39; year. Thus, in April, cryptocurrency dealer Justin Schmidt was hired by the company in response to customer interest in space.
The following month, Goldman Sachs executive Rana Yared confirmed that the company intends to buy and sell Bitcoin – after concluding the pre-eminent cryptocurrency "is not a fraud." Yared said the company has "resonated" with customers wishing to keep the future of Bitcoin or Bitcoin:
"It resonates with us when a customer says:" I want to keep the bitcoins or the future of Bitcoins because I think it is a deposit of alternative value. "
In addition, a couple of former executives of Goldman Sachs have moved into the cryptocurrency space.
Former Executive Director Priyanka Lilaramani joined the Malta HOLD encrypted startup as a new CEO in May, after 10 years of service as a director at the company. Previously, former Goldman Sachs manager Breanne Madigan joined the Blockchain.com crypt portfolio in April.
Galaxy Digital founder Mike Novogratz has also attracted a former Goldman Sachs executive, Richard Kim, to take on the role of CEO of the cryptocurrency merchant bank in April. It is understood that Kim had worked on the encryption of the company before his departure.
Despite the apparent talent escapade encrypted by Goldman Sachs, the company is pursuing its plans in the sector.
In June, the company confirmed that it was planning to launch a trading desk on cryptocurrency derivatives. Goldman Sachs is already helping customers clarify Bitcoin futures, according to COO David Solomon.
The move followed some positive comments from Blankfein in an interview with Bloomberg in June. The CEO postulated that Bitcoin and cryptocurrencies could be adopted by traditional institutions, just as paper money replaced gold and silver coins:
"I observe the evolution of money, we have started with gold as money.A gold coin was worth $ 5 if you had $ 5 of gold.In the end they would give you a piece of paper with the promise that there was $ 5 of gold to support it, and you could go and redeem it.
"Then they gave you a piece of paper and said there is $ 5 gold, but you can not redeem it. And then at some point they gave you $ 5, they're not going to redeem it and they do not even have $ 5 even if you wanted to. We still do it today and I see that it is transforming.
"If I could go through that fiat currency, where they say this is worth as much because the government says it is, because you could not have a currency consensus."
JPMorgan Chase – forgetting the tulips
United States The banking group and the financial services company JPMorgan Chase has had a hate-love relationship with cryptocurrency in recent years.
CEO Jamie Dimon has stigmatized the Bitcoin attack in 2017, comparing the cryptocurrency with the tulip mania while labeling a fraud. He went as far as threatening to dismiss any commercial operator who was selling BTC on behalf of clients.
What followed in the following months can only be described as bipolar, as the company announced that it would consider the offer of access to customers in Chicago The Bitcoin futures market of Mercantile Exchange, launched in December.
Dimon seemed to change his mind at the beginning of 2018, claiming to have regretted his comments in 2017, while arguing that he had a "lack of interest" in space. A few weeks later, the CEO refused to answer the questions posed by Cointelegraph at the World Economic Forum, saying that he is not a "skeptic" of cryptocurrencies.
In February, the company then delivered its annual report to the SEC, in which it labeled cryptocurrencies as competition and a risk to its activities.
"Both financial institutions and their non-bank competitors risk that the processing of payments and other services may be interrupted by technologies such as cryptocurrencies that do not require intermediation".
The company said it could be forced to adapt its products to retain customers, emphasizing that it could eventually lose market share.
This apathy seems to have slowly changed, as the company started making moves that seemed to suggest it would begin to embrace that blockchain technology was here to stay.
A long-term blockchain-based project, the Quorum, was formed in 2017 in collaboration with the Ethereum Enterprise Alliace. It has a series of global conglomerates involved and is essentially an Ethereum platform aimed at meeting the needs of large companies seeking to use distributed registers and smart contract technology.
As a private blockchain project, Quorum's success shows that the benefits of blockchain technology have not gone unnoticed by the heavyweights of the financial world. The popularity of the quorum eventually led JPMorgan Chash to consider turning it into a separate business entity, attracting more partners, and driving the development of additional blockchain-based business solutions.
In May, the company also filed a patent for a peer-to-peer (p2p) payment system that uses blockchain technology for intra and inter-bank deals. At the same time, the company created and held the role of crypto-asset strategy manager.
It is understood that Oliver Harrris, the man chosen for the role, will pioneer new cryptographic projects in the bank – as opposed to establishing active cryptocurrency trading. The company will look into crypto-custody services and blockchain applications for JPMorgan Chase's payment services.
Overall, the company has maintained cryptocurrencies on one arm while embracing the benefits of generalized accounting systems to improve its services.
This attitude towards cryptocurrency has been evident in the fact that the bank has banned customers from using its credit card services to buy crypt. The company has also faced collective legal action after customers have complained that they have charged exorbitant fees for the purchase of credit card encryption.
While this may leave much to be desired, the company appears to be grappling with conflicting views on the industry. He sees the value of blockchain technology, but seems to be far from active trading or facilitating such services for his clients.
Morgan Stanley also had an interesting trip in tandem with blockchain technology and cryptocurrencies.
It appears that the company has begun to evaluate the subject in more detail in June 2017 – Bitcoin, in particular. Among the ever-increasing price of cryptocurrency, Morgan Stanley issued a statement suggesting greater regulatory clarity was needed amid an influx of interest from customers.
"Government acceptance would be needed to accelerate further, the price of which is regulation."
More or less during the same period, it emerged that Morgan Stanley used blockchain-based platforms to process transactions and backup records as early as March 2016.
While things were coming to life in the queue of 2017, Morgan Stanley CEO James Gorman lent an optimistic voice in October, contrasting characters like Dimon, calling Bitcoin "more than just fashion":
" I've invested in this, I've talked to a lot of people who have, of course it's highly speculative, but it's not inherently bad, it's a natural consequence of the whole blockchain technology. "
He changed the subject a few weeks later, warning investors that the huge peak in value was nothing but "speculative".
"Something that rises 700% in a year – is, by definition, speculative, so anyone who thinks of buying something that is a stable investment is deluding himself."
The company was rather quiet in the next two months. After a bullish run that ended with a modest correction in the market, Morgan Stanley then announced that he was helping customers clarify contracts with Bitcoins.
In March, the company told customers that Bitcoin was similar to the Nasdaq, but it moved "15x" faster. Furthermore, Morgan Stanley hypothesized that the financial markets would move towards the use of the crypto in the future:
"In the coming years, we think that the attention of the market could turn more and more towards cross-exchanges between cryptocurrencies / tokens, which would have only distributed directors and not through the banking system. "
Recently, in August, Morgan Stanley hired a cryptanalute trading expert to run his digital resources department.
It is also worth noting that audit firms have taken a keen interest in the blockchain over the past 12 months.
Big players like PwC, Deloitte and KPMG are actively using different blockchain technologies in various ways.
This demonstrates the different applications of blockchain technology – not just for payments, but for auditing, value storage and an almost unlimited list of possibilities.
While these traditional companies clearly have plans for their involvement in the cryptocurrency markets, there seems to be a general sentiment that most are moving towards adoption.
Therefore, it becomes a question of when – not if – we will see institutional investors move up the markets on a large scale.
Having previously worked at Goldman Sachs for 10 years, Novogratz has a deep understanding of the world of investment banking. In a July 19 interview at a blockchain conference in South Korea, Novogratz suggested that mainstream large-scale adoption is still far away in five years. However, people could expect to see many more financial institutions gradually enter the markets in the coming years.
According to Novogratz, large monetary investors are still skeptical of investing large sums of money in space due to an alleged lack of trust. :
"Think about how institutional investors work – it's hard to tell your boss" I have money in places you've never heard of. "You need a trusted name keeper – a Japanese bank or HSBC or ICE or Goldman Sachs – to allow institutional investors to feel at ease. "
Blockchain.com founder and CEO, Peter Smith, told Bloomberg in an interview in July that the latest moves in the cryptocurrency markets indicate a "consolidation" of the markets:
"I think now on the market, you have a lot of regulatory clearness that did not exist even a year ago.You have different types of order flow: you have outlets and institutional. institutional increases critically with the introduction of new institutional products, you will see a higher level and a consolidation in the market. "
Smith went on to say that institutional investors are currently entering the market, which could affect the recent recovery in the price of Bitcoin. However, he also cautioned that people would notice the full effect of this in mid-2019.
Anthony Pompliano, founder and partner of Morgan Creek Digital Assets, told Cointelegraph that major financial institutions are naturally drawn to areas of interest, especially when it concerns the wishes and needs of the client.
"Big financial institutions are capitalistic in nature, they are interested in serving their customers – who want to make money – while driving better financial performance.While more customers are looking for Bitcoin, cryptocurrency and digital products, these financial institutions will be forced to participate. "
However, Pompliano also believes that the cryptocurrency space will continue to develop according to its own pace in the coming years: " Bitcoin and cryptocurrency will continue to grow with or without the support of legacy financial operators. this, the markets benefit from the sophistication and size of their participation. "
What about ETFs?
The approval of a fund traded in Bitcoin (ETF) has been pursued by a number of industry players in the past. some years.
In particular, the Winklevoss twins have requested the approval of a Bitcoin ETF in 2017, which was rejected by the SEC. Once again, on July 26, the SEC rejected the second attempt by the twins to launch an ETF.
This did not rule out the possibility that ETFs are approved for other financial institutions in America.
The investment company Direxion revised its application for ETFs was rejected until September 21st. The SEC will deliver the ruling on that date, giving more time to consider this application more closely.
However, the move causes everyone to guess what might happen once the market has its first Bitcoin ETF. As Pompliano suggests, the potential approval could have a marked effect on the cryptocurrency markets:
"The approval of a Bitcoin ETF would have a very positive impact on the cryptography industry.The main advantage is the minor friction for the purchase by mass consumers of Bitcoin, without having to deal with the complexity of digital portfolios and exchanges If the introduction of Gold ETFs on the gold market is indicative, we should expect a great deal post-Bitcoin ETF inflection point. "
Once again, the encrypted world will wait for this latest development to gain a full understanding of the possibilities and implications. Until then, the current recovery of Bitcoin seems to be the sum of all these different factors, after a difficult semester of 2018.