High Influx Of Institutional Investors For Bitcoin-Where Are They?

It was taught that the next Bitcoin bull-run will be led by a high influx of institutional money. Tempted by the possibility of unheard profits by traditional investment practice, and reassured by big and respected brands offering custodial solutions of institutional nature. So what happened?

According to Bloomberg, we can see in our bitcoin news today that most of the investors are still standing on the margins, taking their time, while in the meantime cryptocurrency hedge-funds are being closed in huge magnitude. Almost 70 were closed in 2019, that mostly provided to pensions, family offices, and wealthy individuals. The number of freshly launched funds in 2019 fall more than half from 2018.

There is, of course, the still present anticipation for the liberalization by the US Securities and Exchange Commission (SEC) of the cryptocurrency market, specifically the approval of a Bitcoin ETF. The entire year was spent by the SEC delaying decisions on two applications for Bitcoin ETF, and then after spending all of the postponement excuses they finally rejected them.

Besides the statement of Robert J. Jackson Jr. that a Bitcoin ETF was inevitable, given back in February of 2019, we cannot say that there was no high influx of institutional investments so far. The Analytics company, Skew, posted a tweet on Tweeter in a response to the Bloomberg article.  It observed that the well-known institutional exchange giant, LMAX, is in continuation of gaging market share in the Bitcoin market with its digital branch. It has surpassed Kraken and Bitstamp and is now processing volumes similar to those of Coinbase.

The Chicago Mercantile Exchange (CME) had two $1.5 billion sessions in a row on its bitcoin futures in June 2019, where around 35% of Bitmex’s open interest was reached. Taken into consideration the certain differences in maximum leverage, this likely represents more collateral committed to the trades than on the majority of high-leverage derivatives platforms.

Momentum is gained by the products of the physically settled future of Bakkt, and in January of 2019, Bakkt and CME will be introducing options products. But in another tweet, that we have in our latest bitcoin news Skew stated that open interest on CME futures is low for over 6 months, sparking speculation that traders are closing their books for the conclusion of the year.