Since early 2020, there are quite a few market players are preparing for crypto market. When it comes into 2021, we had record-breaking token prices and unprecedented industry news. Our analysts have done some research in the market and start from who the market players in the financial markets, how crypto challenges the traditional market and change our lives in payments.
1. More institutional players in the digital assets game
Understanding the preferences of major institutions and their behavior toward the digital assets industry helps us to understand who the major players in the market are, and their long term view of the market.
A survey conducted by Greenwich Associates among 770 institutional investors shows below
Current Exposure and Channels for Exposure
36% of institutional investors surveyed currently invest in digital assets
Perception of Digital Assets
Almost 60% of all investors surveyed have a neutral or positive perception toward digital assets.
Appeal of Digital Assets
Almost 80% of investors find something appealing about digital assets. The most appealing characteristics are the lack of correlation with other asset classes, exposure to an innovative technology play and high potential upside.
Obstacles to Investment
The most common obstacles to digital asset adoption are price volatility, concerns around market manipulation and lack of fundamentals to gauge appropriate value.
Categorization of Digital Assets
More than 6 out of 10 investors feel digital assets have a place in portfolios. Almost 40% of investors believe digital assets belong in the alternative asset class. 20% of investors believe digital assets belong in an independent asset class.
Digital Asset Investment Products
More than 80% of investors indicated they would be interested in institutional investment products that hold digital assets.
Current investment was led by crypto funds, high net worth individuals, financial advisors and family offices. The portion of US investors who have an allocation to digital assets increased to 27% from 22% in 2019. We believe there are multiple factors that may be driving ownership including, but not limited to the improved performance of digital assets in 2020, the entrance of incumbent custody, trading and derivatives service providers; the expansion of the types of regulated derivatives available to institutional investors; Facebook’s announcement of and regulatory hearings around the consortium-based Libra project, which fueled awareness of digital assets; and bitcoin ETF applications.
Bitcoin continues to be the digital asset of choice. The results were in line with our expectations as bitcoin is the largest digital asset in terms of market capitalization. It also has the longest track record, substantially more institutional infrastructure (e.g. custody, exchange, derivatives, investment products), and most of the publicity from mainstream media outlets.
2. Crypto ETFs first launched in Canada and attract trading volumes
Canadian Cryptocurrency ETFs Are Showing Monster Trading Volumes. One-third of the 25 most actively traded ETFs on the Toronto Stock Exchange were cryptocurrency funds. Even though we are used to crypto ETFs, we still need to remember Bitwise was rejected by SEC in 2019.
Bitwise first filed the ETF proposal with NYSE Arca in January 2019, kicking off its most recent push to offer retail customers a regulated bitcoin product. The company sought to be the first firm to launch an ETF in the U.S., alongside competitor VanEck, which filed a similar proposal in January with SolidX and Cboe BZX.
In 2021, capping out a week of firsts for cryptocurrencies, Canada approved three Ethereum ETFs last week, which would be the first in the world to hold Ether tokens.
Proposals from Purpose Investments, CI Global Asset Management, and Evolve ETFs all were approved by the Canadian financial regulator and are to begin trading Tuesday, April 20th.
The move follows shortly on the heels of Canada’s approval of the first-to-market Bitcoin ETFs. The first, the Purpose Bitcoin ETF (BTCC), launched in late February and has already amassed over $1 billion in assets.
3. Money flow from stock market to crypto market. From meme stocks to meme coins.
In a note to clients Tuesday morning, Goldman analysts identified 19 U.S. stocks with market capitalizations over $1 billion that have the highest blockchain and cryptocurrency exposure according to public disclosures and found that the companies have averaged a 43% return this year—more than three times the S&P's 13% gain over the same period.
Trading in the cryptocurrencies market fulfils for some people the same purpose as trading in the traditional stock market does. Profit, ownership, and motivation are the three plain reasons why people have been investing in the stock market since forever, and all these reasons are fulfilled by the cryptocurrencies market too.
Initial Public Offerings have smoothly been replaced by Initial Coin Offerings. Investing in companies that open ICOs is so effortless that it might be preferred over the traditional methods by almost all of the investors in the near future.
Dogecoin is pushed up by Elon Musk’s diamond hands, ranking at #5. Shiba Inu token has come out of nowhere to become a top 28 cryptocurrency, ranked this afternoon in the 28-spot with a total market capitalisation of US$26.46 billion on 17th May 2021.
4.Payment in bitcoins
VEEM - how the rampant evolution of the mobile phone spurred Marwan Forzley’s fascination to turn the phone into a business-to-business (B2B) payments network. How generations of companies have tried to use correspondent banking to solve for B2B cross border and failed, the intricacies of payment rails and the infrastructure to support them, the impact of COVID on global e-commerce, how the future will blend the distinctions between digital wallets, banking services, and crypto wallets.
Paypal - PayPal announces the impending launch of crypto trading to its 325 million users. The move isn’t overly interesting in its own right, but the implications for the crypto space are worth exploring.
Venmo - Rolled Out Crypto Buying and Selling
VaroMoney - Raises $241 Million, Moves Closer To Becoming A National Digital Bank
If you are interested in any part of this research, please do not hesitate to leave messages for us. We have not covered innovated products such as DeFi and NFTs. We will find an opportunity cover them later and any open discussions on the forum are very welcome.