A growing number of institutional investors are showing interest in cryptocurrencies including Bitcoin and other cryptocurrencies, as reported by CoinDesk. The number of investors in the retail sector, however, is stagnant, reports CoinDesk citing an analysis by Morgan Stanley.
The research firm in its reports dubbed ‘Bitcoin Decrypted: A Brief Teach-In and Implications’ studies six months data on Bitcoin and pinpointed some of the most notable trends in the cryptocurrency market. The report was released on 31 October 2018.
The Morgan Stanley report, in particular, emphasize on the authors perspective on the ‘rapidly morphing theses of the market. The report starts by explaining the meaning of Bitcoin as ‘digital cash’. The authors of the report state that the investors have been found of showing complete confidence in cryptocurrency and believing it to be a solution for certain underlining issues within the financial sphere of the economy. The cryptocurrency has been viewed as a new payment gateway to completely unique institutional investment class.
The thesis is developed considering certain issues and findings around the Bitcoin ecosystem. These issues include instability of the market, new technologies that are cheaper than Bitcoin, some hacks, and hard forks.
According to the current market, thesis Bitcoin is coming up a relatively new institutional investment category. The cryptocurrency has in fact gathered much attention from the investors for past one year, according to the authors of the report. It is also further noting that since January 2016, the amount of crypto assets under management has increased to $7.11 billion which is currently under the supervision of venture capital companies, private equity firms, and hedge funds.
Another important thing is that the large financial institutions are growing which shows interest in the thesis, as highlighted by the report referring to investments in Seed CX, BitGo, Binance, regulatory approvals, Coinbase’s recent fundraising round and Fidelity’s new crypto services division.
However, the investors did face issues as highlighted by the report. The issues that were most commonly felt by the investors included regulatory uncertainty, a lack of regulated custodian solutions as well lack of support by a large financial institution in the crypto market.
Going forward, the report also looked into a certain topic such as different types of cryptocurrency that require a certain level of price stability.
Bitcoin is swiftly moving towards trading as opposed to the stable coin USD-Tether, as stated by the report citing Tether operated controversial, dollar-linked token. Almost half of the current Bitcoin trading is against digital assets; it is the same trend which was felt in 2017. According to the author of the report, one notable fact is that many crypto exchanges do not favor fiat currencies in particular to the current market scenario.
Newly formed crypto exchanges are expecting the next wave of development which may include various firms creating their own stablecoins. However, the researchers are of the view that not all stablecoins will be able to survive the market conditions. An increased adoption, however, is likely to be felt by those with lowest transaction costs, defined regulatory structure, and highest liquidity.