Institutional investors double down on crypto

Institutional investors’ crypto stakes are increasing. The institutional investors traded nearly trillions of dollars worth of crypto through last year, which was almost ten times as in 2020.

• Two of America’s trillion-dollar banks unveiled new crypto products this week: State Street, situated in Boston, is developing “huge plans” to provide crypto services to high-net-worth individuals, while BNY Mellon will introduce a crypto custody platform later this year.

• Crypto capabilities are being explored by both the New York and London stock exchanges. Recently the New York Stock Exchange has filed a trademark application for an NFT marketplace, signaling that it may compete with OpenSea. The London Stock Exchange Group has entered into an agreement with U.S.-based cloud-tech provider Tora dealing in $325 million, enabling crypto trading and banking as part of the plans.

• E-commerce giants are exploring the possibilities of payment through crypto. In a recent interview, Jamie Iannone, eBay CEO, stated that the auction company’s main focus is on millennials and Gen Z with the launch of last year’s NFT trading with the possibility of considering crypto payment. Even Rakuten, a Japanese e-commerce company, recently launched an NFT marketplace.

• Crypto-focused exchange-traded funds (ETFs) are gaining popularity. Recently “WGMI” Valkyrie Bitcoin Miners ETF was launched by Valkyrie, crossing $1 billion in crypto funds. Grayscale Bitcoin Trust’s parent company, one of the largest U.S.-based crypto funds, launched a public campaign to persuade the Securities and Exchange Commission (SEC) to enable spot Bitcoin ETFs to begin trading. (In contrast to existing ETF products that hold crypto futures or shares in linked industries like crypto mining, spot BTC ETFs would hold crypto directly.)

• An increasing number of significant corporations are incorporating cryptocurrency into their treasuries. Flexport, a worldwide transportation company, disclosed on Twitter that part of its $1.6 billion balance sheet is held in Bitcoin. Block, the parent firm of Cash App, has over $300 million in BTC and reported approximately $2 billion in BTC income in the fourth quarter of 2021. KPMG Canada — the Canadian arm of the global accounting behemoth (which stated that it holds BTC earlier this year) – purchased a World of Women Ethereum NFT worth $70,000 to promote women’s engagement in crypto.

According to Fidelity’s latest study, 70% of institutional investors anticipate buying or investing in digital assets “in the near future.” So what is it that is attracting them? Many things, but one is the potential for diversification, as crypto may deliver returns that are less connected with traditional markets than any other asset type. The S&P 500, for example, has lost around 2% since last Friday’s rise, while Bitcoin is up 15%.