The Bitcoin price entered another bearish trend this week after failing to pierce $10,000 earlier in the month. Bitcoin now sits at 58 percent below the all-time high it set in December, but one former JPMorgan trader remains confident that Bitcoin will trade above $20,000 before the year is over, CNBC reported. Danny Masters, who serves as chairman of investment firm CoinShares, told CNBC despite last year’s parabolic run-up, the cryptocurrency market is still largely deprived of the tools that institutional investors need to operate effectively in the nascent markets. “We need to see this structure continue to build,” Masters said of the cryptocurrency industry, adding:
“We need to see the custody solutions come and be provided. We need indices and we need performance measures where we can actually start to understand what we’re talking about and measure our performance.”
That wasn’t Masters’ only complaint about the cryptocurrency market..
“We need to do more mature work around the ICOs, so that post ICO we have a token life cycle,” he continued. “And just give investors more clarity, better expectations, more transparency.” “We’re not even at the part yet where I’d say institutional investors even started in commodities. Because these things — indexation, custody and so on — aren’t there to bring in those bigger people just yet,” he said.
However, the industry — which to date has largely been comprised of retail investors — is gradually building out its institutional infrastructure with investment firms and hedge funds starting to pour in support for the cryptocurrency market space.
One example of this is Coinbase; this week they unveiled a robust line of institutional products, ranging from trading tools to custodial services. Meanwhile, Japanese holding company Nomura partnered with cryptocurrency wallet manufacturer Ledger to launch a cryptocurrency consortium that will develop products and services for institutions, Bitcoinist reported. Then there are Wall St firms like Venrock (a compound of “venture” and “Rockefeller”) and Soros Fund Management as well as many others getting involved in investing in cryptocurrency as well as looming ETFs, Coinivore reported. Even the chief executive officer (CEO) of Nasdaq, Adena Friedman, expressed her bullish optimism for the future of cryptocurrency. Adam White, General Manager at Coinbase, wrote:
At Coinbase, we welcome these developments as they help accelerate the world’s adoption of cryptocurrency by bringing new capital, greater awareness, and additional infrastructure to the space. This movement requires institutional grade products and services, something Coinbase has been developing with leading institutions and which we are proud to formally launch today.
In keeping with Coinbase’s mission, White highlights its efforts to stay in line with SEC regulations for cryptocurrency trading, which has made the exchange a favorite among institutions cautious to enter the space. Its new product, Coinbase Custody, partners Coinbase with an SEC-regulated broker-dealer for third-party auditing and financial reporting validation. The custodial product offering maintains a high standard of reporting validation that institutional firms require in broker-dealer relationships. A second offering announced is Coinbase Markets, an electronic marketplace based out of Coinbase’s engineering office in Chicago. ‘Coinbase Markets provides a centralized pool of liquidity for all Coinbase products,’ White added. ‘Over the course of the year, Coinbase Markets will introduce new features like low latency performance, on-premise data center colocation services, institutional connectivity and access, and settlement and clearing services. These additions will allow for a more efficient price discovery process to occur, creating tighter markets, deeper liquidity, and increased certainty of execution.’ The third product being offered is Coinbase Prime, a software service that equips institutions with tools for trading cryptocurrency. White describes:
This product will fill a missing piece of critical infrastructure needed for institutions. Over the course of the year we intend to offer lending and margin financing products to qualified clients, high touch and low touch execution services like over-the-counter (OTC) trading and algorithmic orders, and new market data and research products.
This product launch builds on Coinbase’s previous efforts for building traditional investment types like margin trading into cryptocurrency. Finally, Coinbase has created a new Institutional Coverage Group that focuses exclusively on supporting institutional clients (as opposed to retail clients). The support includes “sales, sales trading, research, market operations, and client services support,” White writes. That group will be based out of Coinbase’s New York office and lauds an employee pool with impressive experience in the New York Stock Exchange, Morgan Stanley, as well as regulatory bodies like the SEC and CFTC. Bitcoin is currently trading at [FIAT: $8,001.31] down -4.55% according to Coin Market Cap at the time of this report.
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