By Robert Dykes, Caspian CEO and Co Founder

At the start of 2018, many were optimistic about the growing institutional involvement in the cryptocurrency markets. Signals were looking good, as both CBOE and CME had announced that they would start offering bitcoin futures and Goldman Sachs was one of the first institutions to announce that it would clear futures for its clients on a case by case basis and had planned to launch a cryptocurrency trading desk by mid-2018.

The fact that other institutions were expected to follow shortly, joining Goldman Sachs on the vanguard of the emerging cryptocurrency asset class, was seen as a positive trend emerging from the traditional financial sector.

How 2018 really panned out

As the year progressed, however, the optimistic sentiment waned considerably. The various proposals for a fabled Bitcoin ETF faced rejection after rejection and is now extended until February 27, 2019. Together with the heavy downtrend in the markets (Bitcoin has dropped more than 80% since its all-time high last year), it’s not hard to see how confidence in the space might be knocked. Unsurprisingly, the bearish trend took its toll on Initial Coin Offerings, too, which witnessed a steep decline in funding.

Yet, institutional involvement in crypto in 2018 didn’t seem to suffer the same fate. The launch of crypto hedge funds spiked to all-time highs, with 90 of these being announced in the first three quarters of 2018. Yet, despite cryptocurrencies falling to an all time low in November, only 5% of crypto hedge funds shut down in 2018, according to figures released by Crypto Fund Research.

Additionally, as demand for institutional access to cryptocurrencies increased, the infrastructure required to trade them at an institutional level slowly started to come to market. Caspian launched their full-stack crypto trading platform, comprising an algo, TCA, OEMS, PMS and RMS platform, providing institutional and sophisticated crypto investors with tools they were familiar with in traditional trading.

Fidelity stepped in with a plan to address the absence of well-known institutional custody providers, a barrier that has kept large asset-managers and investors at bay for some time.

Goldman Sachs Group even became the first investment bank to offer a bitcoin trading product to its customers — they started onboarding a small number of clients to test their new crypto trading desk, which allows for the trade of Bitcoin non-deliverable forward contracts.

Also noteworthy was the revelation that institutional investors had become the Over-The-Counter (OTC) trading desks’ biggest buyers, with reports earlier in the year that over $100m per day was being moved via OTC. While their entry into, and activity within, crypto markets might not have been exactly as predicted, to deny they were a growing force would be entirely wrong.

The future of crypto for institutional investors

As with many aspects of cryptocurrency markets, institutional involvement has developed at a more cautious pace than initially predicted at the start of 2018. However, the signals for 2019 look extremely positive, especially as the larger players are stepping in to ensure the foundations are being properly laid for the asset class to evolve.

Goldman Sachs’ call for ‘more institutional-levels tools in the crypto space to enable greater institutional participation’ demonstrates an appetite for ensuring the market is established correctly.

Many seem to agree that 2019 will be the ‘year of the switch on’ for institutional investors, as key components of the infrastructure are gradually pieced together. As 2018 comes to a close, it’s clear that serious players are better armed with tools to enter the cryptocurrency space.

About Robert Dykes

Robert is CEO and Co Founder of Caspian has served as TORA CEO for the past 14 years. Prior to that Robert spent 11 years in the enterprise software and high-tech industry in Europe, North America, and Asia at such companies as WebPartner and Audiosoft. Robert holds a B.A. in Economics from Princeton University

About Caspian

Caspian is a full-stack crypto-asset management platform tying together the biggest crypto exchanges in a single interface, so as to facilitate investments in crypto instruments for newcomers and veterans alike. The joint venture between heavyweights Tora and Kenetic brings to the table a wealth of experience in asset management, accumulated over decades of building and operating trading platforms and technologies

Telegram | Twitter | LinkedIn | Medium | YouTube