Institutions Pouring Into Bitcoin | NFTs More Frothy Than ICOs

THE LATEST ON INSTITUTIONAL FOMO

The wave of institutional interest in bitcoin keeps rising and the larger crypto industry is turning into a tsunami. One week after JPMorgan revealed its bitcoin exposure basket of 11 stocks directly or indirectly tied to the cryptocurrency, it was reported that Morgan Stanley is providing high-net-worth clients with access to three funds that enable ownership of bitcoin, thus becoming the first Wall Street bank to make the direct leap. The following day, BNY Mellon was announced as a strategic investor in crypto custodian Fireblocks’ latest $133 million venture capital round. Fireblocks’ underlying technology will support BNY Mellon’s own digital assets platform, launched in February. The banking giant is hoping to launch its own crypto custody later this year. Over the past few months a handful of legacy financial institutions, including Fidelity and Northern Trust, set up crypto custody units.

Additionally, Visa introduced its new global crypto partner, Hong Kong-based payment and cryptocurrency platform Crypto.com. The partnership will enable Crypto.com to expand its Visa card’s global availability, already unmatched. The startup’s card program is currently the largest of its kind, with more than 30 countries covered, including the U.S. Card users can convert their crypto into one of the supported fiat currencies and make payments and cash withdrawals anywhere Visa is accepted.

BITCOIN IS ENJOYING LIFE ABOVE $50,000

Despite an aggressive $2.2 billion selloff and a shortly followed plunge below $55,000 early in the week, bitcoin seems to have found a high ground. The cryptocurrency has been trading north of $50,000 since March 8. In case you forgot, last March bitcoin was swimming in the mere $5,000-6,000 range. Multiple analysts think the cryptocurrency has been building a solid base above $50,000. That said, briefly at the end of this week bitcoin came within a hair of the $60,000 mark again but couldn’t maintain the momentum.

Undaunted, steady institutional interest in crypto derivative products fits into this rosy picture. According to data from the CME Group, the world’s largest futures and options exchange, open interest in bitcoin futures grew by at least 100% for eight months in a row continuing through February 2021. Perhaps even more thrilling, the capital tied up in these contracts grew at an exponential 1,405% annual rate from $156 million at the end of February 2020 to $2.34 billion a year later. Comparatively, bitcoin saw a three times less increase in price over the same period.

ARE NFTs THE NEW ICOs?

EVERYONE is getting into NFTs (non-fungible tokens), so much so in fact that it is starting to smell a little bit like 2017. The latest newcomer into the fad is rap star Ja Rule, who is selling an NFT of an oil-paint portrait of the infamous Fyre festival’s corporate logo. Bidding for the portrait began on Tuesday at noon with a set minimum price of $600,000.

The NFT hype could also become a conduit for institutional accumulation of ether. Besides auction giant Christie’s, which sold Beeple’s Everydays: First 5000 Days, an array of galleries, such as Nifty Gateway, SuperRare, MakersPlace, Foundation, KnownOrigin and Async Art, are selling NFTs for ETH, “an exchange of acronyms that befuddles both traditional trading and art markets.” Another centuries-old auction house Sotheby’s, is embracing NFTs through collaboration with digital artist Pak and could also start accepting ETH. These sales add ether legitimacy as a form of payment—unlike bitcoin, which is increasingly held by institutional and retail investors as a store of value.

BLOCKCHAIN 50 SPOTLIGHT

Visa is undoubtedly one of the champions of distributed ledger technology. The Forbes 2021 Blockchain 50 member is currently working with 35 bitcoin and cryptocurrency platforms, including the largest crypto exchanges Binance and Coinbase, to help them tap into Visa’s 70 million merchant network. Additionally, the company has applied for more than 150 blockchain-related patents for uses such as making transactions more secure and using biometrics to verify someone’s identity. 

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