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Fidelity Investments Entering Crypto as Debate Over ‘Institutionalization’ Grows  

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One of the world’s biggest asset managers is planning to launch new cryptocurrency offerings by the end of the year, the latest evidence of a broad institutional push to bring digital assets mainstream.

Fidelity to Enter Crypto

Fidelity Investments, the world’s sixth-largest asset manager, is developing a new suite of crypto- and blockchain-focused products, according to CEO Abigail Johnson.

“We’ve got a few things underway, a few things that are partially done but also kind of on the shelf because it’s not really the right time. We hope to have some things to announce by the end of the year,” Johnson told the Boston Fintech Week conference on Friday.

While details remain scant, Johnson said Fidelity’s forthcoming offerings aren’t what she expected when her firm first began researching the space.

As CCN quotes:

“What we started with was building a long list of use cases for either bitcoin, Ethereum, other cryptocurrencies, or potentially just raw blockchain technology. Most of them have been scrapped by now or at least put on the shelf. The things that actually survived were not the things I think necessarily we expected. We were trying to listen to the marketplace and anticipate what would make sense.”

As Hacked reported last October, Fidelity appears to have been one of the first major institutions to mine cryptocurrency. At the time, Johnson acknowledged that her company’s U.S.-based mining operation is “making a lot of money” but the real motivation was to learn how networks and consensus operate.

Crypto Adoption Grows but Questions Remain

With $2.5 trillion in assets under management, Fidelity is one of the biggest players in global finance and its entry into cryptocurrency will provide an instant legitimacy boost to the sector. Despite the recent market downturn, large institutions ranging from Goldman Sachs to Intercontinental Exchange have announced new crypto ventures all designed to bring digital assets to mainstream circles. Although the pace and timing of these initiatives varies, the underlying trend remains overwhelmingly in favor of greater adoption, not less.

Some analysts have warned that the institutionalization of cryptocurrencies such as bitcoin undermines the core mandate of peer-to-peer money. This view was recently conveyed by Andreas Antonopoulos, who argued that the inevitable rise of the bitcoin exchange-traded fund could do more harm than good.

“ETFs fundamentally violates the underlying principle of peer-to-peer money, where each user is not operating through a custodian but has direct control of their money because they have direct control of their keys,” Antonopoulos said.

At this stage in the game, evaluating the impact of institutional money on cryptocurrency isn’t an exact science. Several analysts have noted correlations between, say, the launch of bitcoin futures and the meteoric drop in prices, but establishing causality is less credible given the small size of the futures market relative to trading over-the-counter and on digital exchanges. It has also been relatively easy to show the positive impact of bitcoin futures on volatility. As Diar points out, bitcoin’s volatility has declined sharply since December.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 649 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Crypto’s Watershed Moment Could Be Q1 2019

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If there’s one thing that the 2018 cryptocurrency market has taught investors it’s that you have to be able to see the forest from the trees. Even as the bitcoin price remains approximately 70% from its peak, Fidelity Investments and Bakkt have proven that the industry infrastructure that has been missing has begun to take shape. Today the bitcoin price is hovering at $6,542 on modest volume of $3.2 billion. In order for any gains to take hold, however, trading volume will have to strengthen to more robust levels.

Meanwhile, market strategists like Fundstrat’s Thomas Lee are sticking to their bullish price forecasts of more than $20,000 by year-end while Galaxy Digital’s Mike Novogratz has revised his outlook to the downside. One thing the market seems to agree on is that institutional capital will be a catalyst for gains, and if you ask traders like BKCM’s Brian Kelly, the tide has already begun to turn.

“I would expect over the next three months, six months you start to see the proverbial herd really start to turn in this direction,” he said, adding that based on anecdotal evidence from his hedge fund clients, the plans of big investors to enter crypto are afoot.

The first quarter of 2019 is largely expected to be a watershed period for crypto, as not only are big investors expected to enter the market but according to Kelly, it’s also when traditional retail brokerage houses could unveil their crypto trading solutions to the market.

Fidelity Investments is a first-mover, but their product leaves out individual investors. In an interview with CNBC, Kelly suggested that Schwab and E*Trade could already be working on crypto solutions for retail investors that could be introduced as soon as Q1 2019. Kelly pointed to crypto trading apps like Robinhood, which was able to attract 1 million users to its crypto trading app in a few short days while traditional competitors missed out.

Satoshi’s Vision

But not all of the crypto community is anxiously awaiting institutional adoption. Jackson Palmer, who created one of this year’s best-performing cryptocurrencies, Dogecoin (DOGE), warned that “the institutionalization of crypto will heavily recentralize both power structures and token distribution. So you can say goodbye to much of the original vision for the technology.”

Indeed, Satoshi’s vision was for a “peer-to-peer electronic cash system”, and as the launch of bitcoin futures has proven, the impact of institutional trading products could have negative consequences. But as Kelly pointed out, the industry needs “fresh capital.” And institutional involvement is also a sign of a maturing Bitcoin network, one whose adoption is likely to increase as recognizable brands continue to enter the space.

Featured image courtesy of Shutterstock 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 69 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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Altcoins

Zcash Price Analysis: What is Behind the Recent Surge in Price?

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  • Zcash had jumped over 17% over the period of 12-18th October, before running into sellers.
  • The foundation set to launch the Sapling protocol upgrade. To improve efficiency for shielded transactions.

Zcash over a 6-day period from 12-18th October gained a whopping 17%. Moving quickly from as low as $108, to then be above $126. Since, the price has run into some sellers and touted profit-takinggiven the large run in such as short time frame.

What Is This ‘Zcash’ (ZEC)?

Zcash was a hard fork of Bitcoin in 2016. Unlike the number one ranked crypto by market cap, privacy is ensured via Zcash. Personal and transaction data are kept confidential. This being facilitated through zero-knowledge proofs, allowing conducted transactions to go through verification without any required details about the sender, receiver as well as the transacted amount.

Zcash Set to Launch Sapling Protocol Upgrade

The Zcash foundation recently updated via their blog ‘Sapling Transaction Anatomy’. Full breakdown details can be read there as they are set to launch the Sapling protocol upgrade.

Sapling, this will be a network upgrade that aims to substantially improve efficiency for shielded transactions – paving the way for broad mobile, exchange as well as vendor adoption of Zcash shielded addresses. Their motivations for the Sapling upgrade are to increase speed on these shielded transactions.

Coinbase Speculation Continues to Do Rounds

The community around Zcash continues to speculate on whether the privacy-focused crypto will be added to Coinbase. Earlier in the year, Coinbase said they were exploring the possibility of listing Zcash and others, such as Cardano, Basic Attention Token, Stellar Lumens and 0x on its platforms. This covered back in July and does not guarantee it will be added, but the hope still appears to be flowing through the community.

Zcash Jumps to 20th Largest by Market Cap

Earlier this week, Zcash managed to break into the top 20 cryptocurrencies by market cap. It overtook Dogecoin. The current market cap at time of writing seen at $588,429,693, ahead of DOGE at $513,884,230.

Technical Review – Daily Chart

ZEC/USD daily chart

ZEC/USD has been cooling over the past two sessions, after its recent 17% price run. It isn’t too much of a surprise to see the current easing, given the fast surge higher. Near-term support can be found around $115 area, then further south within a demand zone tracking from $110-105. Looking to the upside, sellers are camped heading into the $130 territory. A higher near-term target would be eyed at $145, price last traded here on 28th September.

This year Zcash is still down some 80% from the highs in January, up over the $800 price level. It has failed to sustain any upside momentum, rallies continue to be sold by the bears. This is something that has been seen across the other cryptocurrecies, not just Zcash. The market continues to search for a bottom.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 33 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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Pantera Capital’s CIO Predicts 10x Growth in Next “Huge” Crypto Bull Run

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Bull pattern

Joey Krug, who is the co-chief investment officer at Pantera Capital, believes cryptocurrency prices have bottomed or at least come close to it, but that doesn’t mean institutional capital will flood the market right away. Pantera Capital, which is a crypto investment fund that oversees approximately $700 million in AUM, participated in Bloomberg’s recent crypto conference in which Krug gave the temperature of the market.

While the bitcoin price may have bottomed, it has been stuck in a trading range, something that Krug doesn’t expect will change until a couple of catalysts take hold. The market drivers will be two-pronged, including the scalability of decentralized apps and the high cost of converting fiat into cryptocurrencies, the latter of which Krug expects is “going to change a lot over the next six to nine months.”

Pantera has been backing blockchain startups that are designed to solve the scalability issue. For instance, while the Bitcoin network can handle seven transactions per second (TPS) compared to “tens of thousands” TPS for Visa and Mastercard, Krug isn’t convinced that Bitcoin will ever reach a similar capacity. “But I do think we will see blockchains as fast as Visa or Mastercard in the next couple of years,” he added.

Incidentally, Spencer Bogart, who is a partner at Blockchain Capital, a crypto and blockchain investment firm that is similarly based in San Francisco, seems to be focused on a similar theme, saying today –

Meanwhile, Pantera’s Krug pointed out that to convert fiat to crypto on U.S.-based crypto exchange Coinbase, the cost is 150-400 basis points via a debit card or ACH bank transfer. “I think within the next year, that will be down to 50 basis points,” said Krug, adding: “Maybe not Coinbase, maybe some upstart.” For instance, the proliferation of crypto trading institutions like Bakkt and Fidelity should drive costs lower.

Market Rally

Fidelity’s move into crypto custody, meanwhile, didn’t make a splash in terms of prices because these days the market is more interested in “actual adoption,” a phenomenon that first requires scalability. While real scalability may remain a couple of years away, that doesn’t mean investors need to wait that long for the next Bitcoin rally. “We could see a rebound before then, but I think that’s going to be the real catalyst that drives the huge next bull run in my opinion,” said Krug, adding: “The crypto space overall [could grow] a good 10x from here.”

Pantera’s bitcoin fund has been performing similarly to the BTC price, while the broader digital asset fund is down more severely as investors flee altcoins and flock to bitcoin as a safe haven. Meanwhile, Pantera Capital is in the process of raising a $175 million crypto fund, the first close for which occurred over the summer and the next close for which is expected by year-end.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 69 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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