Over the last few months, some of the biggest news in crytpocurrency is the fact that Wall Street listed companies are starting to buy Bitcoin. First we had Microstrategy pick up a whopping $425 million worth if the leading cryptocurrency. That was followed up by an announcement that Square was purchasing $50 million.
Other firms have followed suit. Many cite the fact that Bitcoin is an ideal place to store their cash reserves as opposed to fiat.
The expectation is that other firms will end up following suit.
We now get news of another firm quietly amassing a stake in cryptocurrency. Unlike the others, this one is not focusing solely upon Bitcoin. Instead, it has purchased $75 million worth of ERC-20 tokens.
According to a Messari researcher, Jump Trading is acquiring 6 different currencies.
“Jump Trading holds at least $75m in cryptoassets and is the 8th largest holder of COMP (Compound) tokens behind a16z and Polychain. Jump bought 47K COMP in the past 7 days!
Jump also holds KEEP (Keep Network), HXRO, NMR (Numeraire), OXT (Orchid), and MKR (Maker). Jump invested an undisclosed amount in Serum and owns 40m SRM (~$32m).”
This is not all they hold. Here is a listing of their portfolio.
It is not mentioned how much Jump owns of the other currencies.
They are not the only players in town according to Messari. Marc Andreessen's company also has a number of different cryptocurrencies they are holding.
Hedge Fund and Venture Capitalists buying into not only Bitcoin but some other alt-coins. Is this any surprise?
These firms are looking to be the early adopters, getting in before the big players. It sounds a bit odd but these companies are bit players when it comes to the money mangers. The major Wall Street institutions could drop billions into cryptocurrency and still have it as a minor part of their portfolio.
Before that happens, more development is required to satisfy their needs. In the meantime, we appear to be working our way up the scale in terms of company size. The big money is still out there.
What does this all mean?
At this time, it is still a bit of the wild west. These types of firms are speculators. They put their money in places where there is a "good story". They are not opposed to complete losses so long as their winners make up for it. This is the life of a VC operator and risk taking hedge funds.
However, this is not what the bigger players are into. They are not likely to jump onto start ups but, rather, want to invest in projects that show activity. They do not seek to be early adopter, opting for a bit more safety.
We know, at this point, the entire cryptocurrency sector is short on success stories. A lot of what is taking place is speculation and still at the "story" stage. DeFi, for example, is a great opportunity yet it is in its infancy. It will require a great deal more maturity before the huge money flows in.
Ultimately, we are looking at a future where the most value is going to go to projects that actually have something to them. It is no different than the companies that formed during the Internet craze. While VC money poured in, tens of millions dumped on college dropouts who said they were building an app, the big boys avoided that part of the industry.
When everything settled, the major players loaded up on Google, Priceline, and Yahoo, avoiding the WebVan's of the world.
We are seeing history repeat itself. In the end, it all comes down to development. One of the things I like about Hive is that there is continued development occurring. This is vital to the forward progress. Much of what is ranked in the top 50 will not be there in a couple years. In fact, there is a good chance a lot of it will not be around. With all that is out there now, dead projects will outnumber the live ones down the road.
That is the nature of technology so we shouldn't fret about it. VCs play the game of 10s. For every 10 projects they invest in, they look to lose all their money on 60% of them. On 3, they seek to break even while the last one provides all profit by being a homerun.
There is a lot of experimentation taking place and some firms are now betting on what is happening. We are still a long way from when we will have established platforms with a track record. However, as we get nearer, the size of the firms investing in this space will increase.
Bull runs have a way of lifting everything. This is what happened in 2017. However, this time, it makes sense that those projects that are showing progress will likely benefit greater than those without. The selectivity, especially among the bigger money player is going to be present.
In the end, this is a long-term process. Eventually, all the major players will be involved. We are going to see a total market cap for cryptocurrency in the tens of trillions of dollars. To get there, a great deal more work is required. Yet, when that is accomplished, we will likely see the big players, with their billion in cash, enter the mix.
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