Is Institutional Cryptocurrency Investment Gaining Traction?


Ever since Bitcoin started hitting the mainstream believers have been calling for institutional investors to jump in with both feet and experience the huge gains. However, traditional investors are a lot more risk-averse than your Bitcoin maximalist. 

In fact, those who are wielding vast sums of money are not only concerned with the volatility of the Bitcoin market, but they are worried about how one operates and trades within it. 

These investors have been looking for traditional means and methods to enter the Bitcoin space without taking the additional risks associated with holding and operating Bitcoin.

This was part of the reason for the emergence of bitcoin Futures. When the token was at its highest point, CME and CBOE in the US opened the doors to futures trading. This allows investors to open a contract that a legal agreement to buy or sell something at a predetermined price at a specified time in the future. In the case of a Bitcoin future, the asset is the cryptocurrency, but there is no need to hold it – ideal for traditional traders. 

This product has also been gaining a lot of traction recently with news coming out that the CME is petitioning United States regulators to allow its clients to double their open Bitcoin futures positions due to increased interest. 

If successful, each investor would gain a monthly limit of 2,000 contracts per spot month instead of the current 1,000. The move comes on the back of constant growth in demand for Bitcoin futures, with CME’s volumes setting new records on a regular basis. CME reported an average daily volume of $515 million in May 2019.

With that being said, there are concerns surrounding the next biggest advancement for traditional investors – that of a Bitcoin ETF. This continues to be a sticking point for the cryptocurrency community who continue to be shut down by the SEC

Still, VanEck, one of the companies trying to get an application through the SEC, tried a new tactic in this race that seems to have fallen flat on its face. The talk has been that traditional investors would jump at the chance to get their hands on a bitcoin ETF.

Thus, VanEck launched a limited offering that catered for those professional investors. This, however, did not go off as planned because instead of a flood of interest, the offering only saw 4 BTC go through it – a paltry figure that raised many concerns about the actual interest from institutional investors. 

Still, there is bound to be ups and downs in the investment market, and perhaps the issue is not how fast traction is growing with regards to traditional investors, but instead that there certainly is an increase in their interest. 

Darryn Pollock
Darryn has been interested in the blockchain and cryptocurrency space since he heard about Bitcoin in 2015. He then decided to use his journalism degree to report on this fascinating fintech space in 2016, and has not looked back since.

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