The founder of a cryptocurrency company based in Silicon Valley said the sector will grow again this year once large investors watch from the side to enter the market.
Abra Chief Executive Bill Barhydt told Business Insider: "I speak with hedge funds, high net worth individuals, even commodity speculators, who look at volatility in the encrypted markets and see it as a great opportunity. Once that happens, everything breaks.
He added: "Once the floodgates open, they open."
Cryptocurrencies exploded in popularity and price before Christmas, but the market has declined in size from more than $ 800 billion at its peak in mid-December to $ 300 billion today.
The fall in prices has coincided with a decrease in Google's search traffic for cryptography-related issues, which correlates closely with prices.
Despite market fluctuations, Barhydt is confident that prices will recover later this year, as institutional investors, such as hedge funds and asset managers, begin to get into cryptocurrencies. Speaking to Business Insider this week during a trip to Europe, Barhydt said that some Japanese financial institutions started investing in cryptography at the end of last year and that it was partially behind the price rebound at that time.
"There really is not zero large-scale institutional money from the West in crypto at this time," Barhydt said. "That's happening in Japan." Once a large part of the Western institutional money begins to come in, be careful.
"Institutional interest is now starting to grow regardless of Google's trends."
Barhydt said that institutional investment in assets such as bitcoin or ethereum will create a "halo effect" for the broader cryptography market and said: "I think this is going to happen this year."
Regulators around the world have been moving to crack down on the cryptocurrency markets, which have been plagued by scams and pirates. The US Securities and Exchange Commission UU In recent weeks, he has begun looking for hedge funds that have invested in cryptocurrencies. Barhydt is baffled by this and believes that regulation will really help to encourage institutional investors.
"We are getting closer and closer to the real clarity in the West that it is okay to put half a percent of your assets in cryptography," he said.
While half a percent is a small amount of exposure for large investment firms, it could still run into hundreds of millions of dollars, which would be a big boost for cryptomeries, Barhydt said.
This note was made by the journalist Oscar Williams-Grut, for the web portal businessinsider.
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