When institutions larger than the cryptocurrency ecosystem begin to wake up to the potential of crypto, it’s certainly food for thought. Can the ever-evolving world of crypto remain outside of mainstream adoption for much longer?
Larry Fink, the CEO of BlackRock, the largest asset management firm in the world with around $9.4 trillion in AUM, doesn’t appear to pull any punches when it comes to speaking his mind. In 2017, Fink dismissed crypto as an “index of money laundering.” But just three years later the BlackRock CEO admitted that assets like Bitcoin had caught his attention.
“I do believe the role of crypto is it’s digitizing gold in many ways,” Fink said in a recent interview with Fox Business, while also referring to BTC as an “international asset.” Today, BlackRock is gearing up to launch one of the first Bitcoin ETFs, subject to SEC approval, in what promises to be a flagship moment for the cryptocurrency landscape.
The arrival of an exchange-traded fund from the world’s largest asset management firm is about far more than providing more exposure to crypto on Wall Street, it’s an exceptional form of institutional advocacy.
Data already shows that institutions are waking up to this latest shot in the arm for crypto acceptance. According to the PwC report, Rebuilding confidence in crypto, some 46% of surveyed hedge funds confirmed that they intended to deploy more capital into this asset class by the end of 2023, while 37% claimed that they’re waiting for further market maturity before investing.
Sustaining an Institutionally-Focused Ecosystem
One of the biggest risks facing institutions seeking to embrace crypto is that they’re entering a world where many participants champion decentralization, and consciously reject traditional financial processes for more decentralized financial services.
Because decentralization makes it more difficult to regulate the industry through single centralized bodies, some institutional investors may be put off by a perceived lack of security. However, other market commentators believe that the arrival of institutions will help to create an adaptable ecosystem that can suit all players.
“I think we’ll get two versions,” explains Clara Medalie, director of research at crypto market analysts, Kaiko. “I think we’ll still see a continuation of the more Decentralized Finance side which is completely trustless. But we’re also going to see a permissioned version of decentralised finance that will be incorporated by these more institutional actors and this has to do with tokenisation.”
“You can’t really have the fully automated DeFi side when you’re talking about traditional finance because there is the risk component, there’s compliance, there’s regulation, and so I think it will be a combination of both depending on what the actual use cases are.”
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Institutional access to these newly hybrid crypto markets will be accelerated by the arrival of Bitcoin ETFs, which will allow institutional investors and traders the opportunity to utilize a regulated and familiar investment vehicle for institutions to access through more traditional brokerage accounts.
This would prevent institutions from having to fully immerse themselves into decentralized exchanges to buy and store their assets directly. By simplifying access to crypto through ETFs, we will invariably see a broader range of institutional arrivals in the cryptocurrency market who would otherwise be cautious or wary of existing infrastructure across the market.
Bitcoin’s Halving Event and The Next Bull Run
Bitcoin’s pre-programmed halving events have been a catalyst for bull runs ever since its creation.
The term ‘halving event’ refers to an approximate four-year cycle that sees the mining rewards for Bitcoin distributed to its miners halved, which automatically contributes to ramping up the asset’s scarcity.
Bitcoin Halving
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With Bitcoin’s 2016 and 2020 halving events culminating in a new all-time high value for the asset in the following year respectively, much has been made for the prospective resumption of the trend in 2024.
Although the cryptocurrency landscape offers very little in the way of recurring trends due to mass market volatility, it’s down in no small part to BTC’s halving cycle that Standard Chartered issued a forecast that Bitcoin would attain a value of $120k by the end of 2024.
Using Bitcoin’s stock-to-order flow chart as a guide, we can see a loose correlation between Bitcoin halving events and price rallies that corroborate Standard Chartered’s forecast. The resumption of this trend would not only be lucrative for institutional participants within the crypto space, but it would also provide a significant boost to the market capitalization of the cryptocurrency market.
Institutions Hold the Key to Their Future
At present, the prevailing cycle surrounding the institutional adoption of crypto is that it’s the institutional pioneers that can drive meaningful change in the industry.
“Are we ready for institutions? Just looking at everything that happened, probably the answer is no,” said Chen Arad, co-founder and chief experience officer at crypto risk surveillance firm Solidus Labs. “But the map comes with the territory.”
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It will only be through institutional adoption and advocacy that the crypto space will become a productive environment for more institutions.
Although there’s still risk throughout the industry, we’re seeing evidence that the crypto ecosystem is becoming safer and more sustainable for all participants.
In the launch of Bitcoin ETFs providing institutions with unprecedented exposure to crypto markets in a regulated environment, we may see a surge in advocacy that converts institutional interest into intent.
When institutions larger than the cryptocurrency ecosystem begin to wake up to the potential of crypto, it’s certainly food for thought. Can the ever-evolving world of crypto remain outside of mainstream adoption for much longer?
Larry Fink, the CEO of BlackRock, the largest asset management firm in the world with around $9.4 trillion in AUM, doesn’t appear to pull any punches when it comes to speaking his mind. In 2017, Fink dismissed crypto as an “index of money laundering.” But just three years later the BlackRock CEO admitted that assets like Bitcoin had caught his attention.
Advertisement
“I do believe the role of crypto is it’s digitizing gold in many ways,” Fink said in a recent interview with Fox Business, while also referring to BTC as an “international asset.” Today, BlackRock is gearing up to launch one of the first Bitcoin ETFs, subject to SEC approval, in what promises to be a flagship moment for the cryptocurrency landscape.
The arrival of an exchange-traded fund from the world’s largest asset management firm is about far more than providing more exposure to crypto on Wall Street, it’s an exceptional form of institutional advocacy.
Data already shows that institutions are waking up to this latest shot in the arm for crypto acceptance. According to the PwC report, Rebuilding confidence in crypto, some 46% of surveyed hedge funds confirmed that they intended to deploy more capital into this asset class by the end of 2023, while 37% claimed that they’re waiting for further market maturity before investing.
Sustaining an Institutionally-Focused Ecosystem
One of the biggest risks facing institutions seeking to embrace crypto is that they’re entering a world where many participants champion decentralization, and consciously reject traditional financial processes for more decentralized financial services.
Advertisement
Because decentralization makes it more difficult to regulate the industry through single centralized bodies, some institutional investors may be put off by a perceived lack of security. However, other market commentators believe that the arrival of institutions will help to create an adaptable ecosystem that can suit all players.
“I think we’ll get two versions,” explains Clara Medalie, director of research at crypto market analysts, Kaiko. “I think we’ll still see a continuation of the more Decentralized Finance side which is completely trustless. But we’re also going to see a permissioned version of decentralised finance that will be incorporated by these more institutional actors and this has to do with tokenisation.”
“You can’t really have the fully automated DeFi side when you’re talking about traditional finance because there is the risk component, there’s compliance, there’s regulation, and so I think it will be a combination of both depending on what the actual use cases are.”
Institutional access to these newly hybrid crypto markets will be accelerated by the arrival of Bitcoin ETFs, which will allow institutional investors and traders the opportunity to utilize a regulated and familiar investment vehicle for institutions to access through more traditional brokerage accounts.
This would prevent institutions from having to fully immerse themselves into decentralized exchanges to buy and store their assets directly. By simplifying access to crypto through ETFs, we will invariably see a broader range of institutional arrivals in the cryptocurrency market who would otherwise be cautious or wary of existing infrastructure across the market.
Advertisement
Bitcoin’s Halving Event and The Next Bull Run
Bitcoin’s pre-programmed halving events have been a catalyst for bull runs ever since its creation.
The term ‘halving event’ refers to an approximate four-year cycle that sees the mining rewards for Bitcoin distributed to its miners halved, which automatically contributes to ramping up the asset’s scarcity.
Bitcoin Halving
With Bitcoin’s 2016 and 2020 halving events culminating in a new all-time high value for the asset in the following year respectively, much has been made for the prospective resumption of the trend in 2024.
Although the cryptocurrency landscape offers very little in the way of recurring trends due to mass market volatility, it’s down in no small part to BTC’s halving cycle that Standard Chartered issued a forecast that Bitcoin would attain a value of $120k by the end of 2024.
Advertisement
Using Bitcoin’s stock-to-order flow chart as a guide, we can see a loose correlation between Bitcoin halving events and price rallies that corroborate Standard Chartered’s forecast. The resumption of this trend would not only be lucrative for institutional participants within the crypto space, but it would also provide a significant boost to the market capitalization of the cryptocurrency market.
Institutions Hold the Key to Their Future
At present, the prevailing cycle surrounding the institutional adoption of crypto is that it’s the institutional pioneers that can drive meaningful change in the industry.
“Are we ready for institutions? Just looking at everything that happened, probably the answer is no,” said Chen Arad, co-founder and chief experience officer at crypto risk surveillance firm Solidus Labs. “But the map comes with the territory.”
It will only be through institutional adoption and advocacy that the crypto space will become a productive environment for more institutions.
Although there’s still risk throughout the industry, we’re seeing evidence that the crypto ecosystem is becoming safer and more sustainable for all participants.
Advertisement
In the launch of Bitcoin ETFs providing institutions with unprecedented exposure to crypto markets in a regulated environment, we may see a surge in advocacy that converts institutional interest into intent.
The past weekend in the world of cryptocurrency was nothing short of eventful. From the MAGA Coin’s surprising leap to the resilience of memecoins amid Bitcoin and Ethereum’s dips, there was no shortage of intriguing developments. Let’s dive into the highlights.
MAGA Coin’s Remarkable Rise: The MAGA Coin saw a significant jump following ex-president Donald Trump’s endorsement of cryptocurrency. The former leader suggested that crypto enthusiasts should vote for him, resulting in a notable surge in the value of the MAGA Coin. Read the full article here.
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Memecoins Defy Market Dips: Despite the downturns experienced by Bitcoin and Ethereum, memecoins like Shiba Inu and Dogwifhat posted double-digit gains. This unexpected resilience has left many market watchers intrigued. Read the full article here.
See Also: Bitcoin, Ethereum, Dogecoin Edge Lower As Inflation Fears Grip Investors: Less And Less Of King Crypto Available For Masses, An ‘Enormous’ Bull Market Inevitable, Says Analyst
Market Bounce Back on the Horizon?: Despite the “Holiday Weekend Blues” that saw Bitcoin, Ethereum, and Dogecoin take a hit, popular trader Capo of Crypto suggests that the market is poised for a bounce back. Read the full article here.
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Patience Pays Off for Shiba Inu Investor: A Shiba Inu investor turned a $2,625 investment into a staggering $1.1 million after 3.5 years of inactivity. This incredible return on investment is a testament to the potential of the so-called ‘Dogecoin Killer.’ Read the full article here.
Altcoins Set for Major Rally: According to pseudonymous analyst TechDev, altcoins are entering a ‘textbook markup’ phase, predicting a major rally in the offing. This forecast comes as a beacon of hope for altcoin investors amid the recent market turbulence. Read the full article here.
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Read Next: ‘Dogecoin Killer’ Shiba Inu’s Burn Rate Spikes Nearly 250% As Whales Show Interest In The Memecoin
Photo via Shutterstock
This story was generated using Benzinga Neuro and edited by Anan Ashraf.
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Market News and Data brought to you by Benzinga APIs
For those unfamiliar with cryptocurrency, this is a major milestone in Asia and across the world as it opens the road for adoption and investment in cryptocurrency, moving the asset class from niche to mainstream. Although the US allowed spot bitcoin ETFs in January, it only recently approved applications to list spot ether ETFs; a second round of approvals will be needed before the products can begin trading. The US’ decision on ether ETFs came a month after Hong Kong became one of the first in the world to approve them.
Hong Kong’s first-mover advantage could attract a new wave of fintech activity and talent to the region, leveraging its forward-thinking regulatory framework. These steps have promoted the city as a global digital asset hub.
Hong Kong already has plans to maintain its advantage over the US by looking at strategic ways to keep developing as a cryptocurrency hub. It could do this by approving advanced financial products before the US does. For example, Hong Kong could allow yield-earning options such as ether ETF staking.
Prices of cryptocurrencies against the US dollar are displayed on a screen in Hong Kong on February 29. Photo: Bloomberg
Staking involves locking cryptocurrency tokens to a blockchain network for a set period of time to earn rewards, a practice that the US might be slower to approve. Hong Kong taking a progressive stance would not just be a regulatory success but an indirect endorsement of the potential of decentralised finance. This momentum could draw fintech investment to the region.
Encouraging foreign direct investment is crucial to Hong Kong’s economic recovery. A key move in this direction is the decision by Hong Kong’s Securities and Futures Commission to allow the tokenisation of securities and regulated funds. This means that traditional financial assets, like stocks and bonds, can now be represented digitally, making them easier to trade and manage. This approach has already attracted serious investment, with Bank of China International Holdings issuing about US$28 million worth of these digital securities.
Hong Kong is also becoming one of the main destinations for major cryptocurrency conferences, which are drawing foreign investment from venture capitalists into local cryptocurrency start-ups. In 2023, the Web3 Festival attracted a crowd of 50,000 attendees, including many investors from around the world. These events, which some have referred to as “cryptocurrency tourism”, bring high earners to Hong Kong, who boost the local economy through their spending and investment.
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Overall, Hong Kong is showing the world that cryptocurrency can be regulated reasonably while maintaining an innovative environment. This is likely to impact Hong Kong’s wider financial position. Such regulatory clarity is likely to attract more start-ups and established companies, especially if cryptocurrency start-ups move from the US looking for a friendlier climate to support their growth and innovation.
Additionally, this regulated environment reassures global investors which could enhance Hong Kong’s reputation as a secure and innovative financial hub, boosting investment and job creation in related fields, and driving further economic growth.
Developing the cryptocurrency sector could help alleviate Hong Kong’s talent shortages. Nearly three-quarters of employers in Hong Kong are experiencing talent shortages, exacerbated by a 1.6 per cent population drop by mid-2022. Hong Kong’s ageing population, with 30 per cent expected to be aged 65 and above by 2040, could further intensify this issue.
Hong Kong government efforts, including the Top Talent Pass Scheme, altogether attracted 90,000 skilled workers to the city in 2023. However, continuous efforts to make Hong Kong a hub for cryptocurrency innovation, an industry primarily led by young people, could help reverse the brain drain that the city is experiencing.
Hong Kong’s rise as Asia’s cryptocurrency hub, while not guaranteed, is well-supported by its progressive regulatory environment. Challenges such as red tape in other jurisdictions and talent shortages persist, yet the dynamic cryptocurrency sector could attract and retain talent. The recent US decision on ether ETFs highlights the widening adoption of cryptocurrency assets, making it even more important for Hong Kong to stay competitive.
As global institutions seek clarity and innovation, Hong Kong stands out as an ideal location to set up shop. With its strategic initiatives, Hong Kong is poised to take the lead in the evolution of the finance industry, attracting both companies and professionals to the city.
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Danny Chong is CEO and co-founder of Tranchess, a decentralised yield-enhancing asset tracking and management protocol
VanEck CEO Jan van Eck sees a major sentiment shift underway in the cryptocurrency market linked to the U.S. Securities and Exchange Commission’s approval of a rule change allowing for Ethereum exchange-traded funds.
“This is really one of the most amazing things that I’ve seen in my career with respect to securities regulation,” van Eck told CNBC’s “ETF Edge” this week.
VanEck was the first to apply to the SEC for permission to list its proposed Ethereum ETF. With that first hurdle cleared, VanEck can begin the process of bringing the product to market, though the exact timeline is unclear.
“There was a real risk that the SEC was going to lose any kind of jurisdiction over digital assets. So the first reaction was to get the ETF, Ethereum ETF approval green lighted,” he said. “But I think there’s a bigger narrative going on as well.”
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To van Eck, the buzz around Ethereum this May means clearer regulation on the horizon and an increased investor interest in crypto. In a statement on its website, his company said that “the evidence clearly shows that ETH is a decentralized commodity, not a security.”
Van Eck said the Financial Innovation and Technology for the 21st Century Act, or FIT21, passing in the House on May 8 was another major step toward regulatory clarity for cryptocurrencies, even though he is doubtful it will make it to the Senate before the election.
Ether spiked on the SEC’s approval of applications to list Ethereum ETFs on May 23, but is virtually flat since then.
