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The institutionalization, professionalization, commercialization, and inclusion of Bitcoin (BTC) in portfolios of hedge funds, government bonds, and other companies is likely to continue its upward trend, allowing BTC to gain confirmation, recognition, and validation, leading to further adoption and price increases, according to industry insiders speaking to Cryptonews. com.
The institutionalization of cryptocurrency was the emerging theme of 2020, said Seamus Donoghue, vice president of sales and business development at METACO, a provider of security-critical infrastructure for digital assets for financial institutions. ethereum (ETH) “is likely to be a high beta alternative to Bitcoin’s dominant portrayal as an institutional asset class.” He said it was possible the same Fear of the Missing Out (FOMO) is driving retailers into crypto and BTC price all-time high in 2017, slated to repeat in 2021 as the institutional FOMO.
He added that an acceleration in institutional money at BTC “would have a much larger and deeper impact on the long-term valuation of Bitcoin – the risk is a parabolic move in Bitcoin price in 2021.” It is Donoghue’s opinion that
“We are now at a tipping point where the allocation of bitcoin will accelerate in 2021 and bitcoin will become a key allocation for any institutional portfolio.”
2020 was the year Bitcoin was taken seriously by some large corporations, retail investors, and institutional investors.
“This prepared us for a huge 2021 and beyond,” when we see crypto investments “explode in growth, as more funds add them to their portfolios, more companies accept them as a payment method, and governments adopt positive regulation around it ”, says Tim Bos, CEO of ShareRing, a decentralized platform for sharing economy and self-sovereign identity.
And Sinjin David Jung, managing director of IBMR.io (International Blockchain Monetary Reserve) stated that “the launch in 2021 will be meteoric after Bitcoin is taken over by the institutions”.
“Ultimately, the real added value is simply that people or institutions who buy Bitcoin, not because they mined it, but with actual cash at the current valuation, create a very established monetary system that has now really become Bitcoin. The immutable global independent state book of the world, ”he said.
There are many more positive expectations shared by experts. Eric Wall, chief investment officer for crypto hedge fund firm Arcane Assets, told Cryptonews.com, “It’s pretty clear that Bitcoin is making rapid strides as it becomes an asset class that is a suitable addition to the portfolios of many Represents investors. ” Wall assumes that the professionalization of Bitcoin and its inclusion in the portfolios of hedge funds, wealthy individuals, family offices and corporate treasuries will only accelerate in 2021. “Consumer acceptance is likely to follow this trend,” he said.
Erick Pinos, head of the American ecosystem at Open Source Blockchain Ontology (ONT), said that more large financial institutions will publicly announce that they have transferred funds into BTC in 2021, which “will not only create a snowball effect for other large institutions, who follow with their funds, but also so that the retail market converts more personal wealth into Bitcoin. “
Seamus Donoghue added that retail “will play no small role in crypto” as it gains ever easier access to markets. It’s Bitcoin’s power that drives the narrative, and if the institutional market develops as expected in 2021, rapidly growing ramps will only add fuel to the fire. “The introduction of institutional investors is driving the establishment of an institutional infrastructure to support the introduction of Bitcoin. This in turn forms the basis for investment vehicles for private clients and ramps for private clients, ”he said.
“Wall Street Smells Like Opportunity”
While Will Liu, head of the SAGA decentralized protocol, argues that “by 2021 it will be obvious that Bitcoin deserves its place on Wall Street,” ComputeNorth CEO Dave Perrill also sees that crypto is getting Wall Street’s attention attracts as millennials adopt digital assets as currency and as an asset class:
“Wall Street also smells of opportunity as companies finally realize that money can be made in digital currencies. […] Look for several new investment opportunities for high street investors to participate in digital assets. “
When Dave Hodgson, Chief Investment Officer at NEM Group and Managing Director at NEM Ventures, realizes that crypto will “be launched in increasing amounts” in 2020, Nangeng Zhang, CEO of major bitcoin mining hardware company Canaan, stated that “In contrast to previous years The current demand for Bitcoin is essentially determined by the growing presence of Wall Street institutions in the form of investments via corporate treasuries. ”
Giving examples of companies like Grayscale, MicroStrategy and Galaxy Digital investing in crypto, he said they reflected “a growing appetite for bitcoin among institutional players, but also the credibility of the asset in the eyes of traditional companies”.
Seamus Donoghue added Square, saying that “Treasury management has been turned on its head” as treasurers seek a strategy to manage their cash equivalents in a time of global negative interest rates and quantitative easing, and “Bitcoin wins as Alternative to fiat money markets or fixed income investments. “
And that’s not all, Nangeng Zhang reminded that investment management firms like Ruffer “stepped in” while S&P Dow Jones Indices announced the launch of crypto indices to meet growing demand. Additionally, PayPal shows that its users can leverage crypto on its platform, “a clear sign of acceptance by mainstream gamers,” and offers “critical” recognition, “with commercialization being a valuable form of endorsement for cryptocurrencies,” said Zhang adding that in 2021, “I expect even more promising developments.”
Matthew Gould of Unstoppable Domains also argued that we can expect more fintech companies like PayPal to “care more about crypto in their products,” while Konstantin Richter, CEO of Blockdaemon, said the trend is that institutions and liquidity providers are fast entering the room, “is likely to continue and increase momentum in 2021.” He added that thanks to PayPal, which offers crypto payments and can buy crypto directly, more users will have access to experimentation with BTC and other cryptocurrencies.
The financial sector’s adoption of crypto is more advanced than that of the corporate sector, Donoghue said, adding that more companies will follow suit as the companies that announced government bond allotment see their share price outperform others.
“With regards to hedge funds and money managers, it is certain that when they publish tables of year-end annual yield leagues and huge outperformance, the early adopters will be asked why they had no exposure to Bitcoin, he said.”
“Don’t fight the Fed”
Meanwhile, Sinjin David Jung notes that, “For all its evils and devastation, the pandemic was the crisis Bitcoin needed due to the additional QE [quantitative easing] The exponential growth in the stock markets created that understanding and fear of how fragile the current financial system is, and Bitcoin has become a very clear hedge. ”
Philippe Bekhazi, CEO of the stablecoin platform Stablehouse, also said the COVID-19 pandemic “accelerated certain already established trends” such as Bitcoin becoming “a kind of digital gold against unbridled money pressures”. He anticipates that the pandemic will have further effects in 2021, such as payment networks based on BTC or ETH will increase significantly as certain countries suffer from economic downturns (such as Argentina, Venezuela, Iran or Lebanon).
Meanwhile, Dave Perrill recalled a popular investment policy: “Don’t fight the Fed.” Perrill said President-elect Joe Biden will assemble his economic team. The US Federal Reserve (Fed) will continue to print more money to stimulate the economy and keep Biden’s election promises. “Rising inflation will continue the acceleration of the dollar decline and the transition of smart money to digital currencies,” said Perrill.
Dave Hodgson argued that if the US continues to expand quantitative easing, diversification “appears to be a sensible, even conservative, fiscal decision” – “and BTC would be one of those natural houses for liquidity seekers.”
Antonio Velasquez, head of communications at Hermez Network, a scaling solution for Ethereum, also notes that “there is no sign that money pressures will stop anytime soon, so we can expect more and more mutual funds, family offices and high net worth individuals to begin with, Bitcoin and Ethereum Assigned parts of their portfolio. “He added that
“Nobody knows where the prices will be, but we can assume that the constant devaluation of the fiat currency will push most cryptos to all-time highs.”
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You can find more insights into the crypto trends in our special series Crypto 2021.