Lack of strong institutional investor interest is the biggest headwind to mass adoption of cryptocurrencies on Wall Street. Immediate reports indicate that only a few institutional investors have shown interest in cryptocurrency investments. This is despite Wall Street powerhouse Goldman Sachs working on the creation of a framework for facilitating institutional investments.
Institutional Investors Uncertain and Disinterested
London-based Revolut CEO, Nikolay Storonsky, has already warned that cryptocurrency investments are not eliciting strong demand as anticipated. Nonetheless, the startup has begun offering cryptocurrency trading. Fidelity is another high profile institution that is also enticing institutional investors to start investing in the crypto market.
“There is no interest from big institutional investors so far. Unless these big institutional investors and hedge funds move heavily into the crypto world, I just don’t think banks will move because they simply try to make money from their clients,” Storonsky in a statement.
While Storonsky expects sentiments to change next year, he still expects banks to stay on the sidelines for much longer. Banks are yet to venture fully into the cryptocurrency sector which has been one of the headwinds that have stifled the growth of the sector. A lack of a well-defined regulatory framework is another large obstacle to overcome.
BlackRock CEO, Larry Fink, has also aired similar sentiments about the bearish outlook in the cryptocurrency space. According to Fink, they are not planning to launch a Bitcoin ETF anytime soon. BlackRock, according to the executive, will wait until the cryptocurrency industry becomes legitimate.
Unsurprisingly, the executive does not expect this to happen anytime soon given that the industry is still in its infancy stage. According to Fink, the company’s clients have zero interest in cryptocurrencies. The lack of interest coming from institutional investors should make life difficult for banks developing sophisticated digital assets derivatives.
In contrast to the bearish sentiments, crypto enthusiast, Mike Novogratz, remains upbeat about the broader sector. According to Novogratz, cryptocurrencies are poised to skyrocket in the next few months, despite coming under pressure in 2018.
Novogratz expects Bitcoin (BTC) to bounce back from the current slump and take out the $20,000 USD level next year. A key driver to the meteoric rise, according to the crypto evangelist, is institutional investors flocking the sector in pursuit of opportunities.
The former hedge fund manager also expects mainstream financial institutions to venture into the cryptocurrency space on Bitcoin gaining mainstream traction. Novogratz expects big institutions, as well as pension funds, to start investing in cryptocurrencies three to six months from now.
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