In the wake of “Black Thursday,” it seemed clear to some that crypto was dead: hundreds of millions of dollars worth of BitMEX Bitcoin positions were liquidated, market liquidity dried up (accentuated by the 50% drop in a day), and Crypto Twitter briefly became a ghost town.
But, according to a new report, institutional interest in Bitcoin is actually rising, not crashing. Color me surprised.
Surprise! Institutions Want Bitcoin & Crypto, Even After 50% Crash
According to Frank Chaparro, News Director at industry outlet The Block, Fidelity Digital Assets — the crypto services division of Wall Street giant Fidelity Investments, a firm with trillions under management — has confirmed it has seen an uptick in interest.
A spokeswoman for Fidelity speaking to Chaparro said that:
From a trading perspective, we continue to onboard new clients every month and are seeing significant pipeline growth. […] And in recent weeks, we’ve seen more momentum across our business.
Update from Fidelity Digital Assets:
– Platform has been expanded to route orders to ErisX
– Fielding more calls from pension funds and family offices
– Trading business is seeing "significant pipeline growth"
– Investors interested in "digital gold" narrative
— Frank Chaparro (@fintechfrank) April 9, 2020
The reporter’s sources confirmed this, saying that Fidelity’s cryptocurrency arm has been fielding an increase in “inbounds from pension funds, family offices, and macro global hedge funds” as investors look for better ways to invest amid the ongoing coronavirus outbreak.
Institutional interest in Bitcoin has been confirmed on an anecdotal level.
In a recent interview that I watched between Raoul Pal of Real Vision and Dan Morehead of Pantera Capital, they both affirmed that they know of prominent Wall Street managers and family office CIOs that have begun to gain exposure to Bitcoin and the crypto space in general. Pal, in particular, said that he “doesn’t know a family office, really, that doesn’t have a bit of it now.”
Presumably, they’re accessing this nascent market through a solution like Fidelity Digital Assets.
As to why this trend is transpiring, Fidelity cited the propagation of “discussions around [Bitcoin being a] store of value and digital gold,” which have purportedly started to “resonate with more investors.”
Indeed, in a recent Bloomberg report, Mike McGlone of the commodities desk explained that with Bitcoin down only about “5 percent in 2020 vs. almost 22 percent for the S&P 500,” he is observing that the cryptocurrency is exhibiting “gold-like adoption, maturity, and performance.”
Similar Scene on the Retail Side
Retail investors are participating in the recent Bitcoin boom too, data has shown.
Although we may sound like a broken record at this point, all data is pointing towards the fact that mom and pop investors are diving into Bitcoin.
“But beyond just a rush, two things are clear: customers of our retail brokerage were buyers during the drop, and Bitcoin was the clear favorite. Our customers typically buy 60% more than they sell but during the crash this jumped to 67%, taking advantage of market troughs and representing strong demand for crypto assets even during extreme volatility.”
This was reflected in other metrics. For instance, crypto trader Nik Patel observed that on three crypto-enabled retail brokerages that are prominent in the U.K., a majority of traders are leaning long on Bitcoin.
For instance, online derivatives site IG.com observed that 78% of client accounts trading BTC are long on the cryptocurrency as opposed to the 22% short.
Three of the most prominent retail brokers in the UK pic.twitter.com/kIvSpcvemG
— Nik Patel (@cointradernik) April 4, 2020
And, of course, anecdotes: over the past few weeks, I’ve personally experienced an influx of calls and texts regarding Bitcoin from my family and friends.