[ I N D E P T H | C R Y P T O ]
Bitcoin plummet by $ 10,000 in under an hour . With 8,000 clients and $ 122 billion of assets traded , Coinbase was one of the first exchanges to buckle alongside fellow high-profile crypto exchange , Binance , which was thrown into the spotlight for similar systematic issues .
The future Crypto is undoubtedly becoming a driving force in the market . The asset class has little correlation to the traditional investment market because of its alternative methods of price discovery . It can offer diversification opportunities and alternative sources of portfolio return to investors in a market where yields are low .
There remain a few pieces of the puzzle left to put together before a whole image of the market can be discovered and this uncertainty causes traditional institutions to pull back from the asset class . The violent peaks and drops in pricing seem unlikely to flatten without the weigh-in from major financial institutions and that is unlikely to happen without sturdy regulation and infrastructure .
Originally coveted by cyber-punks , institutional involvement in digital assets was the last thing on the minds of those that sought to usurp the traditional investment market with cryptocurrencies , but as the space becomes more regimented and interest in market rises , traditional institutions could be forced to jump on the band wagon , whether that be full blown involvement or watered-down crypto tracking funds .
“ Institutional asset managers broadly see [ cryptocurrencies ] too much as Wild West . It is very difficult to put a fundamentally driven price on crypto .”
CARL JAMES , GLOBAL HEAD OF FIXED INCOME TRADING , PICTET ASSET MANAGEMENT
48 // TheTRADE // Summer 2021