Blockchain Capital’s Bogart on Why It’s Been ‘Best Week’ for Crypto
Now that Yale University has earmarked an allocation to cryptocurrencies, it could be the start of an institutional wave. Although the Yale endowment, whose value is is a whopping $29.4 billion, isn’t investing directly in bitcoin or another digital currency, it’s gaining exposure through a couple of leading crypto venture funds.
The development plus a couple of other positive headlines should have ignited a rally, but instead, the bitcoin price is little changed. Blockchain Capital Partner Spencer Bogart isn’t deterred by the subdued market reaction, suggesting instead that this has been the best week of 2018 for crypto, telling CNBC:
“We have a week of amazing news with TD Ameritrade, Ric Edelman and Yale and it has almost no impact on price.”
Subdued Market Moves
Indeed, the market reaction was subdued.
Meanwhile, at year-end 2017, the market ignored any negative developments while crypto prices were in the midst of a bull run. This time around, it’s the opposite dynamic in which the market isn’t reacting to “amazing news,” he said. Nonetheless, the events over the last week will serve as the “building blocks to bring more institutional capital into this space,” Bogart added.
Institutional crypto research firm Omni Research went a step further, pointing out how endowments the size of Yale are generally “risk-averse,” not to mention other headwinds described in the below tweet. He’s right, as it was like turning the titanic when pension funds like Calpers began making allocations to risky hedge funds at the turn of the century. Calpers has since exited hedge funds amid hefty fees, something they wouldn’t encounter in a blockchain industry that centers on decentralization and removing friction from the process. Now Yale could inspire a chain reaction among other pension and endowment investment committees to consider crypto.
Yale endowment news is big b/c institutions are risk averse. Hard to make allocation to new asset class when Buffett, Bill Gates, Jamie Dimon say it's a scam/rat poison. That's a good way to get fired. But Yale is investing? Green light. @BKBrianKelly @novogratz @CremeDeLaCrypto
— Omni Research (@OmniResearch_io) October 5, 2018
Meanwhile, Bogart noted that the next phase of the endowment wave will see these institutional investors “go direct into the markets” once the crypto market has sifted the wheat from the chaff and more of the infrastructure, e.g., custody, has been built. For now, Yale’s Chief Investment Officer David Swensen has bet on Andreessen Horowitz and Paradigm crypto funds.
Despite the fact that the bitcoin price remains 70% below its peak, Bogart believes the No. 1 cryptocurrency, as well as the broader crypto market, is “close to bottoming,” saying:
“It’s going to take a little bit of time. But each of these news items is a piece of kindle that we’re going to throw onto a future crypto bonfire when we have the next bull market.”
The bitcoin price is headed into the weekend trading fractionally higher.
Featured image courtesy of Shutterstock.