By Darren Parkin
The ongoing institutional investment support being shown to Bitcoin and cryptocurrencies demonstrates that they are unstoppable.
This cohort continue to pile into the space despite industry-rocking collapses of some firms and attempts by some governments and central banks to bring crypto down.
The $10 trillion investment giant Fidelity launched their new retail crypto trading accounts this week, moving deeper into the cryptocurrency ecosystem. Not only will the financial behemoth offer services to clients, it is also saying its 23,000 employees can use the facilities to administer their 401(k) retirement accounts.
Fidelity is not alone. As I recently wrote for Crypto AM: “More and more institutional investors, household name investors, Wall Street giants and multinational corporations are all, sensibly, increasing their exposure to crypto.”
Yet still some ‘experts’ are publicly questioning the timing of this highly influential financial giant developing more crypto offerings now.
They cite that the market remains in bear territory, with Bitcoin, the world’s largest crypto by market cap, down 71% since last November.
They flag the collapse this week of another crypto firm, BlockFi, which filed for Chapter 11 bankruptcy following the implosion of acquirer FTX. In the filing, the company indicated that it had more than 100,000 creditors, with liabilities and assets ranging from $1 billion to $10 billion. The company also listed an outstanding $275 million loan to FTX US, the American division of Sam Bankman-Fried’s now-bankrupt empire.
They say that in the week Fidelity launched this crypto proposition, the European Central Bank said Bitcoin is on the “road to irrelevance” slamming the cryptocurrency as a “speculative bubble” with no productive value.
ECB officials Ulrich Bindseil and Jürgen Schaaf wrote that Bitcoin was in an “artificially induced last gasp”.
And they raise how the world’s second-largest economy, China, among others, wants to shut down cryptocurrency trading in all its forms. A statement made clear that those who are involved in “illegal financial activities” are committing a crime and will be prosecuted.
But yet, against all of this, institutional investors continue to increase their crypto offerings.
They will know that China has returned to rank among the top 10 countries in the world for Bitcoin adoption.
It suggests that the ban has either been ineffective and/or poorly enforced.
It will also serve as a wake-up call to other central banks and governments that believe they can ban digital currencies in an increasingly tech-driven world. If authoritarian Beijing has failed to stop Bitcoin – even in the current protracted bear market – it will be almost impossible elsewhere.
Every asset class wants to enjoy the backing of institutional investors as they bring capital, reputational influence and expertise. Crypto, despite having more drama than other classes, is in an enviable position that it still does so. This, it could be reasonably argued, should perhaps be a guide to would-be retail investors.
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