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Powerful Forces Are Reshaping the Bitcoin Market
Julio Gil-Pulgar · @gil_pulgar | May 01, 2018 | 03:00
The cryptocurrency market is shifting into a higher gear as influential investors’ money is about to enter and play a key role in the cryptocurrency industry. Indeed, the growing interest of financial institutions in trading Bitcoin is transforming the cryptocurrency market. Meanwhile, experts are already debating whether retirement plan sponsors should include Bitcoin in 401(k) plans.
Big Money Players are Replacing Retail Bitcoin Investors
The theory that big financial institutions are reshaping the market is gathering steam. In an article entitled “Bitcoin frenzy settles down as big players muscle into market,” Reuters describes the changes occurring in the market, stating:
The cryptocurrency landscape has indeed changed. Mom-and-pop investors who drove bitcoin’s skyrocket rise in 2017 have been pushed aside by government bans on trading, and replaced by cryptocurrency funds, wealthy individuals and established financial firms.
According to the Reuter’s article, the advent of new OTC (over-the-counter) exchanges and platforms managed by big digital asset traders, such as Octagon Strategy, Circle, Cumberland, and Kraken, is also contributing to a reduction in market volatility.
Crypto Funds to Flood the Market
A recent Thompson Reuters survey, which included more than 400 of its clients, determined that one in five financial businesses plan to start trading cryptocurrencies within the next few months.
For example, hedge funds focusing on cryptocurrencies more than doubled in the four months before February 15th, reaching a record high of 226, according to data from Autonomous NEXT, a leading research provider in the financial sector. In this regard, Reuters reported:
Assets under management hit between $3.5 and $5 billion, according to the Autonomous NEXT.
A growing number of influential financial industry actors contemplate joining the cryptocurrency bandwagon. For instance, Nasdaq CEO Adena Friedman, in a recent CNBC interview, said, “Certainly Nasdaq would consider becoming a crypto exchange over time.”
Experts believe that big money players will make the crypto market less volatile and more liquid.
A more stable and mature Bitcoin will undoubtedly make it more attractive to financial institutions and could trigger them to start designing saving instruments for 401K plans in Bitcoin.
In effect, discussions as to whether Bitcoin has a place in the retirement plan space have already started. For example, Charles Hodge, Investment Services Consultant at Milliman, discusses in his paper, “Bitcoin: Should plan sponsors consider it for retirement plans,” whether Bitcoin would be a suitable investment vehicle for retirement plans. He concludes that, at present, blockchain technology is already an attractive investment opportunity. However, he says, “At this time, Bitcoin and other currencies are not appropriate for retirement sponsors.”
Notice, however, that the firm BitcoinIRA claims to have processed USD 300 million in the last 12 months.
What influential forces do you foresee changing the cryptocurrency landscape? Let us know in the comments below!
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