For a while now, the relationship between the traditional financial structure and digital assets has been dramatic. Large institutions have expressed skepticism around cryptocurrency, but more recently, they’ve opened themselves to the possibilities.

Grayscale’s Growth
In the Q1 2020 report from Grayscale Investment, the firm had $2.2 billion in assets under management. About 88% of those funds were from hedge funds and institutional investors. In that same quarter, Grayscale raised more than $503.7 million. Then the market crashed when COVID-19 became a pandemic. The fast recovery of Bitcoin’s value strengthened the asset’s ability to hedge against other investments, and this lured in more institutional investors. More than $1.8 billion flowed from institutional investors to Grayscale’s digital assets.

A Look at Galaxy Digital
Formerly a hedge fund manager at Fortress Investment Group, Michael Novogratz heads Galaxy Digital. It launched two Bitcoin funds in late 2019. Those funds were for institutional investors. By April 2020, those assets under management held $370 million in value.

Regulation of Cryptocurrencies
Both Grayscale and Galaxy Digital are registered through the United States Securities and Exchange Commission. This agency enforces and regulates assets. In mid-2020, cryptocurrency analysis firm CryptoCompare started an hourly Bitcoin benchmark rate with partnering firm VanEck. This was a significant development because it facilitated the tracking of Bitcoin’s performance.

Dimon Does a 180
In 2017, J.P. Morgan Chase CEO Jamie Dimon said Bitcoin was a fraud. Two years later, the bank released its own digital coin paired with the U.S. dollar. In 2020, Dimon approved institutional accounts for Coinbase and Gemini.

Goldman Sachs Maintains Disapproval
Goldman Sachs continues to speak out against cryptocurrencies. It says they’re not a class of assets and not suitable for the firm’s clients. In particular, Goldman Sachs disapproves of Bitcoin.

The NYSE Opens Its Doors to Crypto
In 2018, the owner of the NYSE launched Bakkt. This conglomeration of digital assets creates instantaneous liquidity for large investors and retail clients. One year later, it started Bitcoin futures. In a previous Andrew Katz Seaquake article, details about Bitcoin derivatives were shared. By the end of 2019, more cryptocurrency companies launched custodial services, which set the stage for enhanced institutionalization of digital assets.

Andrew Katz’s crypto analysis explains that institutions demand consistent liquidity and a predictable market for their orders. These trends suggest that crypto has a definite path forward for institutionalization. More infrastructure will be needed to support this process. Reliable market makers and liquidity converters will hold considerable power, and Andrew Katz Seaquake CEO wonders if the world is ready for the game.

Andrew Katz launched Seaquake in 2016. Seaquake provides data services, markets, and liquidity to digital asset exchanges. He previously served as a partner at Smoking Gun Media and as a senior trader at EFG Bank. Katz earned a bachelor’s degree in finance from the University of Colorado at Boulder and completed a master’s degree in finance at Harvard University. His skills in fundamental research, risk modeling, and proprietary trading strategies set him apart from other digital asset and portfolio experts.

Learn more about Andrew Katz on his LinkedIn profile and CrunchBase profile.