Institutional investment is playing a bigger role in Bitcoin’s recent increases in value than it did when the cryptocurrency hit all-time highs in late 2017 and early 2018, according to high-profile traders.
Joe DiPasquale, CEO of cryptocurrency hedge fund BitBull Capital, tells Forbes that the 2019 bull run is displaying different characteristics than the retail-fueled mania in 2017.
“Bitcoin price grew rather steadily in the first quarter of this year as compared to the violent movements of late because the sentiment shift was not retail oriented.
We believe institutions were actively buying Bitcoin since its lows late last year and retail investors only joined in once major psychological barriers were broken, namely the $10k level.”
Cole Walton, co-founder of Plouton Mining and head trader at Kanos Capital Management, notes that Google searches for Bitcoin have yet to spike, indicating the latest resurgence hasn’t been fueled by retail investment.
They aren’t the first crypto insiders to note the shift. Oliver von Landsberg-Sadie, founder and CEO of BCB, a cryptocurrency prime broker that caters to institutional investors, recently told Coindesk that his company brought nine financial institutions located in the UK into the crypto market. They now have 32 banking and over-the-counter trading institutions on board, most of which entered the fold this year.
Dave Hendricks, co-founder and CEO of digital asset management platform Vertalo, says the crypto market’s maturation has played a role in bringing more institutional investors on board.
“During the 2017 run-up, Bitcoin didn’t even have a futures market in place… In the 18 months since the ATH, many more institutions have started following and investing in BTC.
With new leverage products and a more sophisticated buyer base, it’s possible for larger leveraged orders to impact the market.”
The Chicago Mercantile Exchange reported last month that May showed massive growth with 223 new trading accounts, making it the most successful month for its Bitcoin futures product since launching in December 2017. Meanwhile, Binance, the largest cryptocurrency exchange by trading volume, just introduced margin trading in response to high demand from institutional traders.
Crypto Trader Says Mysterious Whale Building Massive Buy Walls – Plus Ethereum, Ripple and XRP, Litecoin, Zcash
From a mysterious crypto whale on Binance to a new fork of Zcash, here’s a look at some of the stories breaking in the world of crypto.
Ethereum and Bitcoin
Crypto traders say an Ethereum whale is making a huge splash on the crypto exchange Binance.
According to Three Arrows Capital CEO Su Zhu, the whale has bought 300,000 ETH worth about $70 million in recent weeks. The most recent buy order clocks in at 20,000 ETH worth about $4.5 million.
The big buy order triggered a debate on whether the whale is trying to create the illusion of demand to push the price of Ether, Bitcoin and the entire crypto market higher.
On Sunday, a separate crypto whale was accused of selling 15,000 ETH on the crypto exchange Bitstamp and triggering a cascade that pushed Bitcoin and the overall crypto market at large into a downward spiral.
Ripple and XRP
The Canada-based crypto exchange CoinField has rapidly expanded its use of XRP as a base pair on the platform. The exchange says it now has 30 coins paired directly with XRP.
Litecoin creator Charlie Lee just sat down for an interview with MaiCoin. The podcast looks at Facebook’s Libra, Lee’s upcoming meeting with Justin Sun and Warren Buffett and Asia’s love for Tether (USDT).
Lee says lunch with Buffett is exposure for crypto. As for flipping the vocal crypto critic into a Bitcoin or Litecoin supporter, Lee says,
“It’s not possible to convince him. He doesn’t invest in technology stuff, so he’s not and won’t be into Bitcoin, and that’s not surprising at all.”
The privacy coin Zcash just had its first “friendly” fork, creating a new coin called Ycash. The new coin was created by Zcash team member Howard Loo, and is described as having a number of goals that differ from Zcash.
“We are launching Ycash to restore a goal – mining on commodity hardware – that appears to have been largely abandoned on the Zcash blockchain. We are also launching Ycash to uphold a promise – that the Zcash Founders Reward would be forever capped at 2.1 million coins – that we fear will come under increasing pressure between now and the expiration of the Founders Reward in October 2020.”
Japan Eyes Development of SWIFT-Like Platform for Cryptocurrencies: Report
While world leaders are facing the threat of Libra and Facebook’s massive userbase of 2.5 billion, enough to transform the entire global financial system seemingly overnight, Japan is spearheading the development of a SWIFT-like network for cryptocurrency, reports Reuters.
Similar to the SWIFT network used by banks, the new international crypto-based platform would allow banks to track transactions and more effectively fight money laundering.
Set to launch in the next few years, it would be monitored by a team related to the inter-governmental Financial Action Task Force (FATF).
Given the decentralized nature of cryptocurrencies which run on public blockchains, however, it remains unclear how the system would conduct its surveillance.
Meanwhile, the world’s financial leaders are moving in concert to stay ahead of the Libra threat. Gathering at the G7 conference in France on Wednesday, Italy’s finance minister told Reuters,
“There’s widespread concern and a decision that this concern should translate into action… to control what’s going on.”
The news outlet reports that a source said there was “a very large consensus on the need to act quickly” in response to the changing landscape of money and global payments and with Facebook’s looming entry into the industry.
Japanese Finance Minister Taro Aso is initiating plans for a comprehensive assessment of Facebook’s Libra.
Said Aso following the first day of the G7 gathering,
“Applying existing regulations alone may not be enough. A comprehensive examination is needed to see if Libra poses new challenges that existing rules do not take into account…
On the other hand, authorities need to respond in a timely fashion so they’re not behind the curve.”
Facebook Libra Risks to Financial Stability Demand ‘Highest’ Regulatory Standards, Says G7
The G7 group of nations has warned that cryptocurrencies such as Facebook’s Libra are a threat to global financial stability.
A task force set up by the G7 to examine the issues said that rules of the “highest” standards are needed to minimize the use of digital currencies in money laundering and funding terrorism, Reuters reportsThursday.
Following a meeting of finance chiefs from the G7 in Chantilly, France, this week, the group also said it would address tax issues raised by the digital economy, as per a draft summary of the meeting obtained by Reuters.
As expected, Facbook’s Libra and its perceived risks to the monetary control of regulators was high on the agenda at the meeting, although some benefits were also observed.
Benoit Coeure, European Central Bank (ECB) board member and head of the G7 task force, told the G7:
“A global stablecoin for retail purposes could provide for faster and cheaper remittances, spur competition for payments and thus lower costs, and support greater financial inclusion.”
Yet, he went on to say that such cryptocurrencies raise “serious risks” to policy priorities, such as anti-money laundering, financing of terrorism, consumer and data protection, competition and compliance with tax rules.
Bank of France governor and and member of the governing council of the ECB, Francois Villeroy de Galhau, also said that, while regulators seek to encourage innovation, “that cannot come to the detriment of the security of the consumer.” He also said more details were needed regarding gray aspects of Facebook Libra.
A piece in the Financial Times today further quotes Coeure as saying that cryptocurrencies like Libra “could also pose issues related to monetary policy transmission, financial stability and the smooth functioning of and public trust in the global payment system.”
French finance minister Bruno Le Maire echoed previous concerns over the threat to the dominance of national currencies by a token launched by a tech firm with billions of users, saying: “The sovereignty of nations might be weakened or jeopardised by these new currencies.”
The draft document from the G7 stated that “significant work” is required from developers of stablecoins like Libra before regulatory approval is likely to be granted.
The FT cites the document as saying:
“As large technology or financial firms could leverage vast existing customer bases to rapidly achieve a global footprint, it is imperative that authorities be vigilant in assessing risks and implications for the global financial system.”
Among its draft recommendations, the G7 says such stablecoins must meet the highest regulatory standards and come under regulatory oversight. A good legal basis in jurisdictions where they operate is also key in order to guarantee adequate protection for stakeholders and users.
The group further lists the need for “operational and cyber resilience” and secure, transparent management of assets to protect market integrity.