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Susquehanna, Fidelity Could Open the Spigots for Institutional Capital in Cryptocurrency

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Susquehanna International Group trades millions of dollars in bitcoin for clients, and now discount broker Fidelity Investments is rumored to be developing a cryptocurrency trading desk. While institutional capital may officially remain sidelined, if you look at the activity of a handful of large financial firms, including the likes of Susquehanna, Fidelity and Goldman Sachs, you wouldn’t know it.

Bart Smith, head of digital assets at Susquehanna, has been making the media rounds, tipping his hand to the expansion plans of the Pennsylvania-based trading firm and his expectations for sidelined capital making its way into the space.

Susquehanna entered the crypto space at the suggestion of Cameron and Tyler Winklevoss, who are deeply engaged in this market. The Pennsylvania-based trading firm boasts private clients of which an undisclosed number trade digital currencies across bitcoin, bitcoin futures and what appears to be a handful altcoins. “We believe that this technology and this asset class is going to change some facet of financial services, and we think it is going to exist forever,” Smith told The New York Times.

Regulation and Infrastructure

But to take cryptocurrency trading to the next level, many are awaiting the arrival of sidelined institutional capital. And before that can happen, two key issues — regulation and trading infrastructure — must mature.

Smith suggested to CNBC that it’s less about the amount of regulation and more about regulatory clarity. “The clarity will allow institutions to come in more than anything else. Institutions don’t like to invest into uncertainty,” he said.

Susquehanna’s Bart Smith on CNBC

Susquehanna has its pulse on the demand among institutions for cryptocurrencies, and he says “there are a lot of conversations,” adding that it’s more difficult to differentiate between immediate and long-term horizon interest. Should the spigot of institutional capital open, Susquehanna’s trading desk is built for it and ready to scale, Smith said, pointing to ERISA and 40-Act assets, which reflect retirement/401(k) and mutual funds.

Incidentally, it was a major development when pension plans started allocating to alternative investments like hedge funds. Eventually, 401(k) and pension investment boards may determine it’s part of their fiduciary responsibility to offer cryptocurrency funds.

Fidelity’s Footprint

The details of Fidelity’s cryptocurrency plans remain vague and appear to be the result of some connecting of the dots more than any formal confirmation like Goldman Sachs eventually made. Fidelity reportedly has several job openings that suggest the discount broker is in the early stages of launching a cryptocurrency trading desk.

Fidelity boasts tens of millions of individual customers, and its support of the cryptocurrency market could open the spigot of another kind — Main Street investors.

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 16 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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As Crypto Markets Grind Lower, Institutional Adoption Continues to Grow

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Two of Russia’s largest banks have launched portfolios dedicated to trading bitcoin and other cryptocurrencies, the local Kommersant newspaper reported Friday. The pilot projects are the latest examples of widening institutional acceptance of digital currencies in spite of the market’s recent correction.

Russian Banks to Offer Crypto Portfolios

Russians with bank accounts at Sberbank and Alfa Bank will soon be able to trade cryptocurrencies in a designated fund that will track price movements on some of the world’s largest exchanges. The portfolio, which is being overseen by the Bank of Russia, will include bitcoin, Ethereum and Litecoin.

Although the full list of assets has not been provided, the portfolio will be revised four times a year, with a trading algorithm balancing the holdings.

Sberbank is Russia’s largest financial institution, with the central bank owning 50% of its authorized capital. Alfa Bank is one of the country’s largest private banking institutions.

Although cryptocurrencies are largely unregulated in Russia, Justice Minister Alexander Konovalov recently confirmed that the asset class falls under the definition of “other property.” Two draft bills on cryptocurrency are still pending in the State Duma.

The Russian government had initially said it would ban cryptocurrencies as they could be use for money laundering and terrorist financing. As digital assets grew in popularity, government agencies took a decisive u-turn, with President Vladimir Putin even considering the launch of a state-backed cryptocurrency.

Institutions Preparing for Cryptocurrency Trade

Financial institutions from New York to London are planning to launch cryptocurrency trading operations in the not-too-distant future. An April survey by Thomson Reuters showed that one-in-five major banks are considering cryptocurrency trading in 2018, a sign that the niche industry is gaining mainstream acceptance.

Goldman Sachs has been gradually scaling its crypto operations in pursuit of a bitcoin trading operation that is expected to launch later this year. While Goldman won’t be trading bitcoin outright, it will serve in the capacity of market maker for bitcoin futures.

It has been argued that the first wave of institutional adoption of cryptocurrency was poorly timed given the market’s steep losses over the last two quarters. This has led to greater industry consolidation as major firms swept in to acquire cryptocurrency exchanges. Earlier this year, Monex Group announced it would acquire and rehabilitate Coincheck, a Japanese exchange that was hacked for $530 million. Goldman-backed Circle has also bought out Poloniex, one of the world’s largest digital exchanges.

In the realm of blockchain adoption, banks are pouring billions into new commercialization initiatives. According to a recent study by Greenwich Associates, blockchain budgets for major banks in 2017 swelled by 67% to $1.7 billion.

San Francisco startup Ripple has already brought on board hundreds of clients to test drive its blockchain-based payments and liquidity platforms. This includes big-name clients such as UBS, Standard Chartered and Santander.

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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4.6 stars on average, based on 458 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Crypto Expert Maintains $60,000 Price Target for Bitcoin

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Back in January, cryptocurrency expert Phillip Nunn made two bold predictions: bitcoin will reach a low of $6,000 this year before rebounding to a high of $60,000. With his first prediction proving true, Nunn remains steadfast that the latter price point will also come to fruition in spite of recent market turmoil.

The Bulls Will Prevail

In a recent interview with BusinessCloud U.K., Nunn said market volatility will ultimately work in favor of bitcoin, leading to an historic rally before year’s end.

Referring to his January forecast, Nunn said “the prediction was based on, first of all, market volatility which we’re experiencing at the moment.”

Nunn, who heads The Blackmore Group and Wealth Chain Group, said his $60,000 price forecast is “absolutely” possible given bitcoin’s long-term trajectory and role in disrupting traditional sectors. However, at present, bitcoin and other digital currencies are at the mercy of market sentiment and price manipulation, given the relatively small size of the industry. Case in point: cryptocurrency trade volumes plummeted to around $9.5 billion this weekend, the lowest in over two months. Such low turnover makes crypto assets prone to extremely wild swings not unlike the price forecasts Nunn put forward in January.

“All the money that exists in crypto at the moment is from the public, so it’s all about market sentiment,” he said. “A flood of bad news can wobble the market, stuff like regulation. The industry is so small that there’s market manipulation.”

Ultimately, Nunn says bitcoin is helping to create an “internet of value” that will disrupt everything from money to record-keeping.

His view differs markedly from an institution like the Bank for International Settlements (BIS), which on Sunday released a report arguing for bitcoin’s ultimate demise. Although BIS didn’t frame the outcome exactly in those terms, the Swiss institution said the digital currency is ultimately too costly and too prone to manipulation to become a mainstay in traditional finance.

Bitcoin Prices

Bitcoin was little changed on Sunday, as prices consolidated around $6,500. With daily turnover of $3 billion, bitcoin’s trade volumes accounted for more than a third of the crypto market total.

The world’s largest cryptocurrency by market cap is down nearly 5% over the past week. That pales in comparison with some of the leading altcoins, which have fallen double digits over the same period.

Bitcoin has experienced multiple selloffs this year, with some analysts attributing the decline to the launch of bitcoin futures in December. Fundstrat Global Advosrs’ Tom Lee recently argued that bitcoin prices tend to fall into the expiration of the monthly futures contracts. This is likely caused by traders longing actual bitcoin and shorting the futures market.

Like Nunn, Lee maintains a strongly bullish outlook on bitcoin and has called for prices to rebound to $25,000 this year despite recent market dynamics.

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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4.6 stars on average, based on 458 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Bitcoin Could ‘Bring Internet to a Halt,’ Says Bank for International Settlements

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The Bank for International Settlements (BIS) has delivered its most vocal criticism yet of bitcoin and related cryptocurrencies, arguing that the digital asset class may never be ready for mainstream adoption in the financial world.

BIS Weighs on Bitcoin, Cryptocurrency

In a 24-page report published Sunday as part of its annual economic review, BIS said bitcoin suffers from “a range of shortcomings” that will ultimately derail its effort to become a widely used method of payment and investment asset.

The arguments put forward by BIS are not unlike previous criticisms lobbed at the digital currency. The report’s authors argue that bitcoin consumes too much electricity and is at the center of too much manipulation to become a key artery in the global economy and financial system.

“At the time of writing, the total electricity use of bitcoin mining equalled that of mid-sized economies such as Switzerland, and other cryptocurrencies also use ample electricity,” the report said. “Put in the simplest terms, the quest for decentralised trust has quickly become an environmental disaster.”

According to the Bitcoin Energy Consumption Index courtesy of Digiconomist, bitcoin miners consume more electricity than 159 countries. For BIS, the size and growth rate of digital currency ledgers will eventually overwhelm existing technologies and bring the Internet to a halt.

BIS also concluded that, despite claims to the contrary, bitcoin’s decentralization is a fundamental flaw because it is “a poor substitute for the solid institutional backing of money.”

Based in Basel, Switzerland, BIS is an 88-year-old institution that promotes financial stability through central banking. It has been described as ‘the central bank for other central banks’ and has been instrumental in measuring the impact of the global currency markets.

Institutions Embrace Cryptocurrency

Despite BIS’ warning, institutions ranging from Goldman Sachs Group to the New York Stock Exchange are taking important steps to make cryptocurrencies accessible to their clients. Even banks choosing to remain on the sidelines of the crypto revolution are adopting blockchain technology to improve internal processes and boost business opportunity.

According to a recent study by the U.S.-based Greenwich Associates, major banks increased their blockchain budgets last year by 67% to $1.7 billion. Payments and trade finance are the most popular commercialization initiatives. The blockchain is also being exploited for revenue opportunities, settlement times and risk management.

BIS even acknowledged the power of distributed ledger technology in its criticism of cryptocurrency. The report released on Sunday conceded that distributed ledgers can improve functions related to cross-border flows and trade finance.

That said, an institution like BIS is clearly ingrained in the existing financial paradigm that has given more power to central banks. The “solid institutional backing of money” really refers to the fact that central banks can print as much money as they want while fractional banking allows institutions to lend out considerably more money than they hold in reserve. A supranational body like the BIS, which promotes this system, is unlikely to develop a favorable view of bitcoin.

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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4.6 stars on average, based on 458 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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