Crypto exchange Huobi says institutional interest in Bitcoin (BTC) and crypto markets is on the rise as investors’ appetite for an alternative asset class grows.
In a press release, Huobi reveals that its recently launched Futures and Swap trading platform hit $5.2 billion in volume as of May 6th. The crypto exchange estimates that institutional investments account for up to 40% of the total volume on its derivatives trading platform.
Huobi says the growth in institutional investment could be due to the financial uncertainty that has risen in traditional sectors due to the pandemic. The uncertainty appears to be driving investors to look for alternative investments.
“People have seen Paul Tudor Jones praise Bitcoin for its potential as a speculative asset, stating he invests a small percentage of his portfolio in the coin, but expects it to be the best performer. People have also seen Grayscale Bitcoin Trust buying up a major portion of coins newly mined after the Bitcoin halving.”
Ciara Sun, vice-president of Huobi global markets, says cryptocurrencies possess unique features that are not seen in other asset classes.
“The crypto market is unique in that it can fulfill both demands in liquidity and volatility.
For example, traditional investments like real estate have price volatilities but lack of liquidity. Foreign exchange markets have high liquidity but lack price volatility. Investors see arbitrage opportunities in crypto as an emerging market. An above-average range annual return can be seen as good performance in the traditional market, but is actually a quite mediocre return in the crypto derivative market.”
Besides satisfying liquidity and volatility interests, Sun also says investors consider crypto as a way to hedge against economic policies imposed by governments.
“Traditional assets are directly influenced by monetary policies and economic measures like quantitative easing, but digital assets are decoupled from the acts of any one nation or governing body.”