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Growing institutional interest drives positive sentiment and confidence in cryptocurrencies
Institutional interest in cryptocurrencies such as bitcoin is growing – and it was a long time coming. While previously financial institutions distanced themselves from this emerging asset class and rather focused on the underlying technology – blockchain – to improve the efficiency of their operations, the trend is finally changing.
In a recent survey of over 400 clients, Thomson Reuters found that 20 percent of the participants said that they are considering trading cryptocurrency over the next 3-12 months. Of this 20 percent, 70 percent (around 56 companies) said they were planning to do so over the next 3-6 months.
US-based multinational investment bank Goldman Sachs recently made headlines when it made the first hire for its cryptocurrency markets unit. UK banking giant Barclays is also reportedly considering opening a crypto trading desk. Furthermore, Nasdaq CEO Adena Friedman recently said that the stock exchange would definitely consider becoming a cryptocurrency exchange over time.
Eiland Glover, CEO and Co-founder of Kowala, believes that the entry of institutional investors in this space holds the promise to provide “much higher levels of liquidity along with a tsunami of new money into the crypto markets.”
The crypto industry is welcoming this change in trend and sees immense potential. They believe that such news would instill positive sentiment and confidence in the crypto market.
“I think the public catching wind of news that Goldman Sachs and other financial powerhouses are not just showing interest but proactively hiring and investing in the crypto markets is instilling a positive sentiment across the board. Traditionally, these institutions have been ahead of the curve in terms of savvy investment decisions and the public simply wants a piece of that,” Josh McIver, CEO of ULedger, said.
“If the blockchain and crypto industry want to attract institutional investors, the only way forward is by established exchanges looking to build their offering, whilst maintaining their best practices from the traditional market. The potential is huge but both regulation and the existing high-quality industry standards need to be implemented to build the next evolution of crypto exchanges,” Nick Cowan, CEO of the Gibraltar Blockchain Exchange, said. “Industry-leading brands, such as Nasdaq, entering the space will drive the ecosystem forward by instilling confidence and attracting institutional-grade interest.”
According to Shane Brett, co-founder and CEO of GECKO Governance, Nasdaq considering becoming a cryptocurrency is a “natural progression” from their recent collaboration with Gemini.
“Having an industry heavyweight such as Nasdaq consider a move towards crypto gives additional credibility to the industry and indicates a clear pathway to a more regulated environment for institutional investors,” Brett added.
“Nasdaq saw opportunities early in the first wave of interest in bitcoin. For a few years already, they formed partnerships, ran tests, and paid close attention. Their bullishness and plans after this scrutiny means it stands on the shoulders of insight into the security and reliability of the actual commercial networks that make up this new asset class,” Nolan Bauerle, Director of Research at CoinDesk, said.
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