Tag Archives: institutional

Public Market- Where are the biggest institutional opportunities?- Digital Assets: Realised – Hong Kong

Public Market- Where are the biggest institutional opportunities?- Digital Assets: Realised – Hong Kong

Public Markets – Where are the Biggest Institutional Opportunities? ETF, Mutual Funds, Stocks, Bonds

– Moderator: Julien Bahurel, Partner, Deep Blue/Definer Fund
– Anndy Lian, Senior Advisor, Peach Income Fund
– Tony Wong, Managing Director, CSOP Asset Management
– Nicholas Studholme Wilson, Chief Operating Officer – Asia, GFO-X

At the panel discussion, industry experts gathered to explore the transformative potential of tokenization in asset classes and the future of financial markets. The conversation, moderated by Julian, delved into the implications of digitizing assets and the infrastructure required to support this evolution.

Julian opened the panel by highlighting the significance of functional markets, which are valued at approximately 4 trillion dollars. The focus then shifted to the opportunities presented by liquid markets through tokenization or digitization.

Tony discussed the enormous opportunities within the crypto space, particularly in Asia, where a significant portion of crypto trading activity originates. He emphasized the institutional interest in crypto markets, especially following price openings, and the inquiries from traditional managers and private bankers about accessing these new asset classes with appropriate risk levels. He pointed out that mutual funds might be the first asset class to adopt tokenization, revolutionizing the distribution landscape. He envisioned mutual funds being traded on exchanges like any other asset, within regulatory frameworks, making them accessible 24/7.

Anndy concurred with Tony’s views on mutual funds. He described tokenizing them as a “piece of cake” and predicted a substantial uptake, particularly in Hong Kong, which could become a significant player in the Asian market. Anndy also touched upon the role of exchanges like NASDAQ in a blockchain-dominated world, speculating that traditional exchanges might adapt to offer 24/7 services using blockchain technology.

Nicholas shared his perspective on achieving the end goal of a fully tokenized state on multiple chains. He stressed the importance of starting with existing infrastructure to generate revenue before transitioning to more advanced systems. Nicholas also discussed the challenges of latency and privacy considerations, suggesting that permissioned chains might be a necessary starting point before moving to public chains.

The panelists debated the coexistence of traditional liquid markets with tokenized markets, agreeing that while they may initially coexist, the superior efficiency of tokenized systems would eventually lead to a transition.

The conversation also touched on the regulatory implications of tokenization. While the technology offers exciting possibilities, it also presents challenges for regulators who must adapt to a rapidly evolving landscape.

As the discussion concluded, the panelists expressed optimism about the future of tokenized markets. They envisioned a world where traditional and tokenized markets coexist and eventually converge, thanks to improved infrastructure and broader acceptance of blockchain technology.

The panel’s insights suggest that while the journey toward widespread tokenization is still in its early stages, the destination promises a more inclusive and efficient market for all participants. As the technology matures and regulatory frameworks evolve, we may witness a significant shift in how assets are traded and managed globally.

Digital Assets: Realised held in Hong Kong on 7 March 2024. The event brought traditional funding, listing players, and new digital exchange and platform opportunities.

 

Source: https://blockcast.cc/videos/public-market-where-are-the-biggest-institutional-opportunities-digital-assets-realised/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

Why Institutional Allocation to Crypto Is Rising

Why Institutional Allocation to Crypto Is Rising

The cryptocurrency market has experienced a remarkable recovery in 2023, after a prolonged bear market that lasted for most of 2022. The total market capitalization of all cryptocurrencies has increased by 34%, from $798.69 billion at the beginning of the year to $1.07 trillion as of October 10, 2023. Bitcoin, the leading cryptocurrency by market share, has surged by 74% since its yearly low of $15,883 in November 2022, reaching over $27,669.84 as of October 10, 2023.

This impressive performance has attracted the attention of institutional investors, who have been increasing their exposure to crypto assets in 2023. According to a survey by Binance Research, 35.6% of institutional investors increased their crypto allocation over the past year, while 47.1% maintained their allocation. Moreover, 50% of institutional investors expect to increase their allocation in the next 12 months, while only 4.3% expect to reduce it.

But what are the main drivers behind this growing institutional interest in crypto? I will explore some of the key factors that are fueling the institutional allocation to crypto in 2023, and why this trend is likely to continue in 2024 and beyond.

The Bitcoin Halving Event

One of the most anticipated events in the crypto space is the Bitcoin halving, which occurs every four years and reduces the supply of new bitcoins by 50%. The next Bitcoin halving is expected to take place in May 2024, when the block reward for miners will drop from 6.25 bitcoins to 3.125 bitcoins per block. This will reduce the annual inflation rate of Bitcoin from around 1.74% to around 1.1%, making it one of the scarcest assets in the world.

Historically, the Bitcoin halving has been a catalyst for a new bull market cycle, as it creates a supply shock that increases the demand for Bitcoin. According to the CoinMarketCap Bitcoin halving calculator, Bitcoin has reached a new all-time high (ATH) roughly a year after each halving event. For instance, after the first halving in November 2012, Bitcoin reached its ATH of $1,163 in November 2013. Similarly, after the second halving in July 2016, Bitcoin reached its ATH of $19,783 in December 2017. And after the third halving in May 2020, Bitcoin reached its ATH of $68,789 in April 2021.

Based on this historical pattern, many analysts and investors expect that the next Bitcoin halving in 2024 will trigger a new bull market that will push Bitcoin to new heights. For example, according to the stock-to-flow (S2F) model, which quantifies the scarcity of Bitcoin by comparing its existing supply to its new production, Bitcoin could reach a price of $288,000 by 2024. Similarly, according to a recent research by Delphi Digital, Bitcoin could achieve a new price high by Q4 2024, based on its four-year cycle theory.

Interest Rate Cuts by the Fed

Another factor that could boost the institutional allocation to crypto is the monetary policy of the Federal Reserve, which has a significant impact on the global financial markets. In 2023, the Fed has been facing a dilemma between fighting inflation and supporting economic growth, as the US economy has been recovering from the effects of the COVID-19 pandemic. Inflation has been rising above the Fed’s target of 2%, reaching 5.4% in September 2023, the highest level since 2008. However, the Fed has been reluctant to raise interest rates, which are the main tool to curb inflation, as it could jeopardize the economic recovery and the labor market.

Instead, the Fed has been signaling that it will start tapering its quantitative easing (QE) program, which involves buying $120 billion worth of Treasury bonds and mortgage-backed securities per month, by the end of 2023. This would reduce the amount of liquidity and stimulus that the Fed injects into the economy, and could have a negative effect on the stock market and other risk assets, as it would increase the cost of borrowing and reduce the demand for credit.

However, some analysts and investors believe that the Fed will not be able to taper its QE program as fast as it intends, and that it will have to cut interest rates again in 2024, as the economic recovery slows down and the inflationary pressures subside. This scenario would be bullish for crypto assets, as it would increase the demand for alternative and scarce assets that can hedge against inflation and currency devaluation, such as Bitcoin and other cryptocurrencies. Moreover, it would lower the opportunity cost of holding crypto assets, as the returns on traditional assets, such as bonds and cash, would be lower or negative.

Potential Launch of Spot Bitcoin ETFs

Another factor that could increase the institutional allocation to crypto is the potential launch of spot Bitcoin exchange-traded funds (ETFs) in the US, which are investment products that track the price of Bitcoin and trade on regulated stock exchanges. Spot Bitcoin ETFs would provide a convenient and cost-effective way for institutional investors to gain exposure to Bitcoin, without having to deal with the technical and regulatory challenges of buying and storing Bitcoin directly, such as setting up a wallet, choosing a custodian, and complying with anti-money laundering (AML) and know-your-customer (KYC) rules.

Spot Bitcoin ETFs have been long-awaited by the crypto industry, as they could bring a surge of fresh capital and liquidity into the market, and increase the adoption and legitimacy of Bitcoin among mainstream investors. However, the US Securities and Exchange Commission (SEC) has been reluctant to approve any spot Bitcoin ETF proposals, citing concerns over market manipulation, fraud, and lack of regulation in the crypto space.

In 2023, several spot Bitcoin ETF applications have been filed with the SEC, but none of them have been approved yet. However, some analysts and investors are optimistic that the SEC will finally approve a spot Bitcoin ETF in 2024, as the crypto market matures and the regulatory environment improves. For instance, the SEC has recently approved several Bitcoin futures ETFs, which are investment products that track the price of Bitcoin futures contracts, rather than the spot price of Bitcoin. This could be seen as a positive sign that the SEC is warming up to the idea of crypto ETFs, and that it could pave the way for spot Bitcoin ETFs in the near future.

US Elections

The midterm elections will determine the balance of power in the US Congress, which consists of the House of Representatives and the Senate, and which has the authority to pass laws and regulations that affect the crypto industry. According to the latest polls, the Republicans have a slight edge over the Democrats in both chambers, which could result in a divided government for the remaining two years of Biden’s term. This could have significant implications for the crypto industry, as the Republicans and the Democrats have different views and approaches on crypto regulation.

Generally speaking, the Republicans tend to favor a more laissez-faire and innovation-friendly attitude towards crypto, while the Democrats tend to favor a more interventionist and consumer-protective stance. For instance, Republican Senator Pat Toomey, who is the ranking member of the Senate Banking Committee, has been vocal in supporting the crypto industry and urging the regulators to provide more clarity and guidance. He has also co-sponsored several bills that aim to foster crypto innovation and adoption, such as the Eliminate Barriers to Innovation Act and the Securities Clarity Act. On the other hand, Democratic Senator Elizabeth Warren, who is also a member of the Senate Banking Committee, has been critical of the crypto industry and calling for more regulation and oversight. She has also questioned the environmental and social impact of crypto, as well as its role in facilitating crime and tax evasion.

Therefore, the outcome of the midterm elections could have a significant impact on the legislative and regulatory environment for crypto in the US. If the Republicans gain control of both chambers, they could push for more pro-crypto bills and policies that would create a more favorable and predictable climate for the crypto industry and investors. This could encourage more institutional allocation to crypto, as the perceived risks and uncertainties would be reduced. However, if the Democrats retain control of both chambers, they could pursue more anti-crypto bills and policies that would impose more restrictions and requirements on the crypto industry and investors. This could discourage more institutional allocation to crypto, as the perceived costs and challenges would be increased. Alternatively, if there is a split control of the chambers, there could be a stalemate or a compromise on crypto regulation, depending on the level of bipartisanship and cooperation between the parties. This could create a mixed and uncertain scenario for the crypto industry and investors, which could have a neutral or a moderate effect on the institutional allocation to crypto.

In Conclusion

The institutional allocation to crypto is rising due to a combination of factors that make crypto assets more attractive and viable for institutional investors. These factors include the upcoming Bitcoin halving event, which will reduce the supply and increase the demand of bitcoins, the outcome of the US midterm elections, which will shape the legislative and regulatory environment for crypto in the US, and the overall improvement of the crypto market conditions, such as the increased liquidity, volatility, and innovation. However, there are also some challenges and risks that could hinder the institutional allocation to crypto, such as the lack of clear and consistent regulation, the high technical and operational complexity, and the potential cyberattacks and frauds. Therefore, institutional investors should carefully weigh the pros and cons of crypto assets and conduct thorough due diligence before investing in them. Crypto assets are not for the faint-hearted, but for those who are willing to embrace the uncertainty and opportunity of the new digital frontier.

 

Source: https://www.securities.io/why-institutional-allocation-to-crypto-is-rising/

FAQ

According to the Binance Research survey, what percentage of institutional investors increased their crypto allocation over the past year, and what percentage maintained their allocation?

According to the Binance Research survey, 35.6% of institutional investors increased their crypto allocation over the past year, while 47.1% maintained their allocation.

What is the significance of the Bitcoin halving event, and when is the next one expected to occur?

The Bitcoin halving event, occurring every four years, reduces the supply of new bitcoins by 50%. Anndy reminded all that the next Bitcoin halving is expected to take place in May 2024.

What is the potential impact of the US midterm elections on the legislative and regulatory environment for crypto in the United States?

The outcome of the US midterm elections could significantly impact the legislative and regulatory environment for crypto in the United States. Depending on which party gains control of both chambers, there may be shifts in policies, with Republicans generally favoring a more pro-crypto stance and Democrats leaning towards more regulation. The election outcome could influence the level of institutional allocation to crypto, affecting the perceived risks and uncertainties in the market.

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

Will Institutional Adoption of Crypto Continue in 2022?

Will Institutional Adoption of Crypto Continue in 2022?

The principles and practice of web3 and decentralized protocols may be enabling the birth of a new digital world, but central to the ambition is the pivotal role of cryptocurrencies. From stablecoins to new meme coins it’s clear that cryptocurrencies have long held appeal to individual users wanting an exciting new asset which is completely decentralized. A recent report from American Banker found that only about 20% of banks in the world currently offer crypto asset consulting to their clients. However, it found nearly 40% of its banking industry respondents from around the world stated that they may begin providing crypto-asset services to their retail customers in 2022. It also makes sense that if the decentralized economy is to valuable and innovative, that the overall market value of the cryptocurrency sector must continue to rise. And institutional investment is particularly important during this current bear market phase, when the crypto market has shed more than $1 trillion in market cap since November’s high of $3.1 trillion.

 

It’s therefore timely to consider how the widespread adoption of cryptocurrency by institutional investors with substantial sums of money to invest could impact the ideals of decentralization in today’s crypto market. According to a 2021 Alternative Investment Management Association report, on global crypto hedge funds, nearly half of hedge fund managers with $180 billion in assets under management (AUM) were considering investing in Bitcoin. With in terms of the main obstacles to investing, regulatory uncertainty the greatest barrier (82%). So, it’s striking that the report found “64% of respondents said that if the main barriers were to be removed, they would either actively accelerate investment in digital assets.” Considering the report’s identification of regulatory impediments to greater institutional involvement in crypto, despite the risks it’s potentially good for the current bear market that the US Biden administration is due to launch a government-wide strategy for digital assets. This executive order will direct all relevant federal agencies to assess crypto’s opportunities and risks and submit their findings later in 2022.

 

Grayscale Bitcoin Trust had been bullish on institutional investment, having witnessed an influx of almost $2 billion since October 2020, compared to outflows of $7 billion for exchange-traded funds backed by gold. However, in the current downturn it appears one of the biggest causalities has been the trust, as the $27 billion fund (ticker GBTC) has plunged nearly 17% so far in 2022, outpacing Bitcoin’s nearly 9% decline, according to Bloomberg. And just a few days ago CoinDesk reported that crypto trader Tantra, which offered an interest-bearing investment product, planned to close due to the ‘GBTC Discount’ widening to a record level.

 

So, what are the prospects for the future for increase institutional investment with the significant loss of value in the cryptocurrency market currently? The entry of institutional investors into the crypto industry may have accelerated the adoption of digital currencies as mainstream assets. But will institutional investors’ increased adoption of cryptocurrencies continue, or will the combined headwinds of market forces and regulatory pressures provide an obstacle to growth in 2022?

 

What drives institutional investors’ adoption of cryptocurrency?

Investment diversification is a significant reason institutional investors have flocked to the cryptocurrency market in search of assets to balance out their portfolio. While many of cryptocurrency’s procedures and structures compared to ‘TradFi’ are relatively still in their infancy, investors can reap various financial benefits in the long term. In similar fashion, institutional investors see it as an opportunity to enter the sector early and reap the benefits of early adopters. Perhaps one of the most dramatic examples in 2021 was El Salvador’s decision to adopt Bitcoin as legal tender. This was given a fresh twist after the president, Nayib Bukele tweeted he’d taken advantage of the current drop in BTC price, thanks to the fact that “Some guys are selling really cheap.”

 

On the financial management side of the investment equation the news in 2021 that BlackRock, the big news was when the world’s largest asset manager with $9.5 trillion assets, was one of 16 mutual fund managers to gain access to the crypto market via its Global Allocation and Strategic Income Opportunities funds, which have a collective worth of over $40 billion. As Forbes reported in August 2021, “BlackRock is also indirectly exposed to bitcoin via a 14.56 percent stake in MicroStrategy, the cloud software firm with over $3.4 billion of BTC on its balance sheet. MicroStrategy’s outspoken founder Michael Saylor has been one of bitcoin’s biggest champions in recent years arguing that it will soon be on the balance sheets of cities, states, governments, companies, small and big investors as well as core to tech innovation at Apple, Amazon, and Facebook.”

 

Protecting institutional adoption of crypto in the future

As more institutional investors enter the crypto market, it aids in the broader acceptance of digital assets by bringing more excellent stability to the space. For example, we’ve heard various statements that the most popular cryptocurrency, Bitcoin, would increase in value by a factor of 25 over the next several years due to institutional support. While institutional support appears to help crypto stability and value, crypto innovation must avoid the same mistakes traditional financial services made and remain truly decentralized.

 

BigONE’s chairman Anndy Lian said: “As a recent IMF report showed crypto prices are increasing in sync with stocks, following the pandemic and the printing of currency by central banks; so it’s not surprising that when tech stocks declined recently, that crypto would follow suit.

 

“The IMF’s view is that this means less institutional use of crypto is required to diversify risk, and to avoid an increased risk of a larger market downturn as a result. While I disagree with this pessimistic attitude to crypto, I support the report’s conclusion that as regulation makes crypto safer for institutional investment, we also need a robust infrastructure to enable crypto assets to be become part of the mainstream financial system.”

 

Original Source: https://www.ustimesnow.com/will-institutional-adoption-of-crypto-continue-in-2022/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j