Traditional institutions are accelerating their entry into cryptocurrency, is spring coming?

At the beginning of 2020, cryptocurrency ushered in its darkest moment, and even Bitcoin fell to US$3,800.

But after the panic, cryptocurrencies immediately showed their resilience and rebounded against the trend. Especially after being triggered by DeFi, it has continued to heat up until now.

This feast is not only a carnival for the natives of the crypto world, but traditional institutions have also joined in and are heading straight for tokens and their derivatives.

For example, MicroStrategy, a Nasdaq-listed company, has purchased more than 38,000 bitcoins since August this year.

Moreover, DeFi has become very popular recently, and many traditional companies are also considering using DeFi as a means of financial management.

No matter how the outside world evaluates cryptocurrency, it has undeniably become a part of the financial world and is becoming increasingly important.

From Chain to Coin — From Resistance to Embrace

Traditional institutions are deploying blockchain - this shouldn’t be news.

However, traditional institutions have always been cautious about blockchain, so early investments tend to be in blockchain technology and services.

At that time, cryptocurrencies associated with blockchain were still considered heresy , and traditional institutions simply wanted to lay out their plans in the blockchain track with the attitude of not wanting to miss out on what might be the next trend.

But with the rapid growth and expansion of the crypto world, especially the emerging wealth opportunities, the attitudes of traditional institutions have changed - from resistance to embrace.

Of course, the exchanges have the keenest sense of the market.

In 2015, the New York Stock Exchange invested in Coinbase, now the largest regulated cryptocurrency exchange in the United States.

If investing in an exchange is an indirect entry, then the Chicago Board Options Exchange is more direct - it launched Bitcoin futures in 2017.

In addition, traditional exchanges such as Nasdaq and London Stock Exchange have also deployed cryptocurrencies and their derivatives.

Even Nasdaq’s CEO once said: “Once the emerging cryptocurrency industry is regulated, Nasdaq may become a cryptocurrency exchange in the near future.”

In addition to the exchanges themselves entering the cryptocurrency market based on business expansion, investment institutions have also entered the market.

For example, Paul Tudor Jones, a legendary Wall Street investor whose fund Tudor BVI is worth approximately US$22 billion, publicly stated in May this year that he considered a variety of investment categories, including gold, US Treasury bonds, certain types of stocks, currencies and commodities... and finally set his sights on Bitcoin.

“We are witnessing a massive monetary inflation, with all forms of money expanding at an unprecedented rate, the likes of which have never been seen in the history of the developed world.”

According to Jones' calculations, central banks around the world printed $3.9 trillion in currency in the first half of 2020, equivalent to 6.6% of global GDP. So he recommends buying Bitcoin to fight inflation.

There are many cryptocurrency advocates like Jones who come from traditional finance.

For example, Pal, the former head of Goldman Sachs' equity derivatives business, said that more than 50% of his investment portfolio is made up of Bitcoin.

For example, Anthony, a former product manager at Facebook, also said that 50% of his assets are in Bitcoin.

Of course, in addition to Bitcoin, there are many more cryptocurrencies invested by traditional institutions, but Bitcoin is mentioned the most.

Consensus is justice

The reason why cryptocurrency is recognized by traditional institutions is that it is supported by consensus.

If we go back five years, if someone said that Bitcoin is the same as gold, just a digital version, that person would probably be considered a liar.

But looking back now, it is difficult for us to find legendary financial assets other than cryptocurrencies.

And the facts also show that the price of cryptocurrencies is still strongly correlated with traditional financial markets.

It can be said that after several years of market education, a consensus on cryptocurrency has been initially formed . This is the fundamental reason and confidence that promotes traditional institutions to accelerate their entry into cryptocurrency.

For example, according to a 2019 poll of American millennials (aged 18 to 37), 25% of respondents expressed interest in purchasing cryptocurrencies, while only 2.5% of baby boomers (aged 54 to 72) did so.

In addition, other data shows that the enthusiasm of high net worth individuals (HNWI) around the world for cryptocurrencies continues to rise, with 29% of respondents saying they are "very interested" in cryptocurrencies.

“Everything invented before I was born is taken for granted; everything invented between the ages of 15 and 35 is destined to change the world; everything invented after I was 35 is anti-human.”

In short, cryptocurrency, as a heresy of traditional finance, has begun to attract the attention of more and more mainstream groups (or has become mainstream as the followers gradually grow into the mainstream social groups), and cryptocurrency has begun to become a mainstream financial product.

For example, Jim Cramer, known as the "Wall Street Madman", said that although he is a supporter of gold, in order to cope with inflation, he also wants to buy some Bitcoin as a legacy in addition to gold, art and luxury homes.

As the consensus on cryptocurrency grows, it will naturally prompt more traditional institutions to enter the cryptocurrency market.

But does this mean spring has arrived for the cryptocurrency industry?

It is undeniable that the entry of big capital will definitely promote the prosperity of the entire market, but at the same time it will also bring more professional methods - the leeks may be cut more fiercely.