Mike Novogratz is a billionaire investor and former trader at Goldman Sachs, a company which is well-known as a Bitcoin supporter. At the Korea Blockchain Week, Mike Novogratz said that "a whole horde of institutional investors" is moving toward the cryptocurrency market. Given the unreliability of cryptocurrency storages like Coinbase and BitGO, however, they will want to enlist the support of HSBC, ICE, Goldman Sachs, and other well-known institutions. At first, institutional investors are likely to infuse capital into venture funds and ICOs.
In a subsequent interview with TheStreet, Novogratz developed his idea. Institutional investors are starting to understand that the blockchain is the new Internet, and they want to enter the market, as some time ago, they wanted to invest in web businesses. Within the scope of hedge fund opportunities, institutional investors would first invest in venture capital funds. Some of them are already doing exactly this, for example, Sequoia, Polychain, and Benchmark said Mike Novogratz.
In the interview, he also said that tokens are a way of buying a percentage of the company's sales and profits. That is why reputable investors can view them as stocks and infuse capital into the ICOs.
Are Crypto Funds Ready to Accept Institutionalists?
Earlier, some of the "sharks" of the crypto market had already made statements on this topic and had predicted an "invasion of institutional money,” while developing new products and proposals for them.
Grayscale Investments recently announced that it attracts almost $10 million weekly and much of this capital comes from institutional investors. Grayscale Investments is known for offering eight cryptocurrency assets for investment. According to the information contained in the Report on Investments in Digital Assets, in the first half of 2018, more than $248 million was poured into cryptocurrencies through Grayscale Investments. And this is despite the fact that in early January 2018, the cryptocurrency markets lost 75 percent of its record highs. The average amount of weekly investment was only $9.55 million. Of this sum, just over $6 million was going to the Bitcoin investment fund. At the end of June 2018, under the management of Grayscale Investments, the average weekly investment is up to $1.35 billion.
In the first half of 2018, 56 percent of investments came from institutional investors. This information was shared by Barry Silbert, founder of Grayscale Investments. "And what bear market are we talking about?” he wrote in his tweet.
Coinbase is not lagging behind in the development of new products in terms of solid investments. The company recently launched the Coinbase Custody platform to remove barriers to entry through custodial services. The Coinbase Custody service is available to those who can afford to invest at least $10 million. Today, Coinbase operates a capital of $20 billion and hopes to attract at least another $10 billion with the Coinbase Custody platform. It is clear that the new platform was created for the institutional, and under such conditions, their share among new investors will be quite high. The Coinbase Custody service of crypto investment works so far only for the E.U. and the U.S. but plans to enter the Asian market by the end of the year.
Earlier, the launch of custody services for digital assets called Komainu was announced by the Japanese bank Nomura. And again, for the institutional investors.
It seems that Mike Novogratz is not so wrong in his forecasts, and various companies related to the digital assets market are already almost ready for the "invasion of the horde."