There is no doubt that the market capitalization of the cryptocurrency markets has grown exponentially. It’s almost unbelievable to think that at one point the market capitalization of Bitcoin was under $5 billion, considering that it is now over $100 billion.
Regardless, there is no denying the fact that 2018 has been a bearish year, as the entire cryptocurrency market has shrunk by hundreds of billions of dollars. However, this doesn’t mean that more large financial institutions haven’t expressed interest in the sector.
The latest proof of this is the fact that Fidelity Investments, an asset manager with over $7 trillion in assets, has announced that it will provide cryptocurrency trading and custody services for enterprise clients.
This platform will be called Fidelity Digital Assets, and Tom Jessop, the head of the subdivision, noted that “family offices, hedge funds, and sophisticated investors are starting to think seriously about the space.”
The platform will start with the 2 largest cryptocurrencies by market capitalization, Bitcoin and Ethereum, but Jessop stressed that this is the “first step in a long-term vision,” suggesting that more cryptocurrencies would be added. This will not take place until early 2019, however.
Other Institutions Also Consider Entering the Crypto Space
Fidelity isn’t alone, as many other respected financial institutions have been exploring the idea of entering the cryptocurrency space.
In fact, the world’s largest asset manager, BlackRock, has assembled a team to explore the potential of blockchain technology. The CEO, Larry Fink, cautioned that he did not see large investor demand currently, but added that “we are a big student of blockchain.”
Goldman Sachs is one of the U.S. financial institutions most involved in cryptocurrency, as they made a strategic investment in Circle in 2015.mThe cryptocurrency startup, now reportedly worth billions, has become a major player in the cryptocurrency world, first acquiring Poloniex, and launching the USDC stablecoin with major support from influential cryptocurrency players.
Circle has also purchased crowdfunding startup SeedInvest, a move that many believe point to the fact that they are hoping to list tokens as securities.
Citigroup is reportedly looking to make its entrance into the cryptocurrency sector, as well.
The timing is interesting as Bitcoin has plummeted over 50% this year from its high in late 2017, although many in the cryptocurrency community point to the fact that the $6,000 level has been a key support.
Is the Tide Turning for the Cryptocurrency Market?
The CEO of Fidelity, Abigail Johnson, said in the statement that “our goal is to make digitally native assets, such as Bitcoin, more accessible to investors.”
The company already works with tens of thousands of financial institutions, and many believe that its long history of over 70 years provides the cryptocurrency market with a sort of credibility that it has not had before.
Some even consider Fidelity’s entrance into crypto a potential “game changer,” along with the fact that the Bakkt launch is scheduled to take place within the coming months, as well.
Michael Novogratz, founder of Galaxy Investment Partners, and one of the most respected figures in the cryptocurrency world, commented that Fidelity is “getting out ahead of the pack,” before adding that his firm would be a customer.
Fidelity’s announcement doesn’t come as a complete surprise, as its CEO referenced the fact that the asset manager would be making a cryptocurrency-related announcement before the end of the year at 2018’s Boston Fintech Week (where the asset manager is based).
Considering the sheer size of Fidelity, many believe that this will lend new validity and credibility to the cryptocurrency markets, and that other institutional players will follow.