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One of the world’s largest cryptocurrency exchanges Coinbase has revealed that it is experiencing an “explosion of incoming capital” from institutionalized investors around the world. Infact, Coinbase alone has over $20 billion in crypto under custody with a whopping $14 billion of them just added since April of this year. According to the exchange, a series of events have unleashed a wave of institutionalized investment the likes of which haven’t been witnessed in the sector before.
Why has Coinbase been Successful in Shepherding in these Investors?
One of the reasons why Coinbase has been so successful in getting institutional investors from around the world to get into Bitcoin investing is because it hired some of them for solicitation. Take the exchange’s Head of Institutional Coverage Brett Tejpaul. He is a former institutional investor and he has over 25 years of experience in investing with conventional firms. He spent 17 years at Barclays, a British bank and then 9 years at JP Morgan, one of the biggest investment banks in the world based in the USA. In an interview with Heidrick and Struggles International, Tejpaul outlined the massive growth his current company is experiencing when it comes to institutionalized investors. He is particularly focusing on Prime, a service for big institutionalized investors like hedge fund managers, VCs, etc.
Tejpaul was only recently hired to get top investors to invest in the sector. He said:
“I joined in April this year, at that time our assets, institutional assets under custody were $6 billion, today we stand at over $20 billion, so more than a 3-times increase….”
Other exchanges are also targeting big institutional investors around the world. Binance launched a platform for institutional trading back in June this year. Bitfinex, another big cryptocurrency exchange also got a $280 million crypto hedge fund Fugur Alpha and boasted about becoming the go-to exchange for institutionalized investors.
Coinbase is Riding the Wave but Where did it Start?
But while Tejpaul may boast about getting institutional investors through Coinbase, it is actually important to understand the contribution of several pioneering funds that funneled the first big money into crypto. The very first of these was Grayscale, the first Bitcoin-focused asset management company. It invested more than $1 billion into the cryptocurrency sector during 2020 alone and that investment has probably tripled since then. Grayscale was the first institutional investor the crypto world had ever seen. Now we see funds around the world diversifying their holdings and betting on Bitcoin to get their portfolios to increase their worths. All in all, Grayscale lit the flame and the others followed.
Other valuable Inputs and Influences
Famed trader and hedge fund manager Paul Tudor Jones also went bullish on Bitcoin and revealed back in May this year that he had put around 2% of his sizable portfolio into Bitcoin. He also compared Bitcoin to getting into Apply and Google early on. Recently, people like Stanley Druckenmiller also revealed that they had gotten into Bitcoin while a recent survey by Cointelegraph showed that most of the European institutional investors and managers had either already invested in cryptocurrencies especially Bitcoin or are looking to get into this digital sector later on.
Overall, this rush of big money coming into cryptocurrencies had been predicted a while back by futurists and people who run the investment business. However, it wasn’t a single event that got many of them to invest in the sector. The interest slowly developed over time and now we are seeing billions being invested by big funds and banks every now and then. It seems like the investing community has suddenly found the next big thing to invest in and they are here to stay and take it to the moon. This influx of big money does have some downsides to it as these investors are sometimes greedy for a profit and might take off after their goals have been achieved and dump the cryptocurrency they have invested in.
However, the crypto community is known for holding on to its long-term positions and if losses can be minimized and spread out without volatility concerns, the cryptocurrency sector can keep on pushing. So far, the sector has smashed record after record during this year and it seems like the sky is the limit for it at the moment.