Since Bitcoin started entering the mainstream media space with stories of overnight millionaires and early miners raking in millions from the growth of this little-known digital asset, it has looked to attract further institutional investment and interest.
Cryptocurrency believers, in general, felt that by welcoming institutional investment, promoting traditional investment products like Futures and ETFs, that the market would grow to a point where it would reach critical mass and make BTC a household name.
Things seemed to be going well as CME offered futures trading, and grew exponentially, and other Wall Street interest also flooded in. However, the recent market collapse in the traditional sense has revealed just how aligned the decentralized Bitcoin market is to traditional woes.
Many would have felt that Bitcoin would not only ride out the collapse of the market as has been seen in the outbreak of the Covid-19 virus, but actually grow in worth as a safe haven asset and a hedge against the financial uncertainty.
The question — in the long run, once the Covid-19 drama is over — is whether Bitcoin and Wall Street can’t continue forging a relationship, or if Bitcoin should stop pursuing such an alignment.
Ready and waiting
The level of interest from institutional investors was never really quantified until Bitcoin saw what happens when these investors pull their money in an attempt to mitigate their risk. Bitocin’s market collapsed alongside money evacuating the stock market.
But it should not come as much of a surprise as there is evidence out there.
Binance CEO Changpeng Zhao said recently that there are many institutional investors willing to enter the digital currency industry, despite the regulatory uncertainty. But, this point remained a barrier to entry. Alongside the high volatility.
More so, Michael Sonnenshein, Managing Director of Grayscale, added that cryptocurrencies could further benefit from more institutional investors and traditional entities in the space as liquidity increases.
“If you look at the digital currency landscape as a whole, now being US$100 billion to US$200 billion in total as an asset class, that’s pretty small when you compare it to the market caps of other asset classes,” he noted, adding that more capital will help raise awareness and draw in larger investors.
Worth the payoff?
It would appear that although Bitcoin becomes more prone to traditional woes, the payoff of having the asset be attractive to these investors is probably worth the pain. In the long run, regulation of the cryptocurrency space is only going to get better and more attractive, and this will open the doors even more on institutional money.