The crypto markets saw a turn for the worse last year as prices failed to make new highs and came tumbling down for the entirety of the year. Wall Street was sitting on the sidelines, watching the major players pull back and the rest of the market fall apart.
However, reports from New York’s banking hub seem to indicate that the crypto markets may be gaining momentum. The crypto markets have already dropped significantly, with Bitcoin losing 81% of its value from its all-time high of nearly $20,000 and now hovering below $4,000.
It’s evident that Wall Street has sat back and watched this washout of capital leave the crypto markets as no significant money has entered the market.
Crypto OTC Trading Markets Heating Up
While Wall Street has purportedly been waiting for the right time to enter the crypto markets, it appears that selling on over the counter (OTC) desks is heating up, with significant buy volume.
The prominent crypto OTC trading firm, Cumberland has recently pointed out that they have been receiving more buyers than sellers as we shift into the new year.
Desk Update: Historically, our OTC trading is relatively balanced between buyers and sellers. Over the last week, our OTC buy/sell ratio (by notional value) has increased approximately 60% towards counterparties buying.
— Cumberland (@CumberlandSays) January 8, 2019
Furthermore, the CEO of Genesis Trading, Michael Moro has seen a similar reaction from buyers coming into the new year.
Moro believes the selling pressure has subsided in 2019 for a number of reasons:
I’ll echo Cumberland’s sentiments. Year-end saw quite a bit of selling for numerous reasons (e.g., tax loss selling and liquidation of crypto donations). As the year turned, the selling pressure from such activities has subsided, and we have seen more buy-side interest pick up.”
This influx of new buyers on OTC markets is coming from high net-worth individuals and institutional investors as the OTC markets see billions of dollars go through them in a single day.
Tabb Group’s director of fintech, Monica Summerville, told Forbes:
The big deals have to go OTC. A lot of the exchanges limit the order size, so you have to break up your orders, and that’s just fatal.
Institutional Crypto Onboarding
In additon to increased crypto OTC buyers, 2019 will see an increase in institutional crypto exchanges and services.
With the likes of Bakkt coming to market, a physically settled Bitcoin futures exchange by the Intercontinental Exchange (ICE), and Nasdaq to follow suit with a similar exchange service, institutional investors from Wall Street will have plenty of reliable ways to invest in crypto.
Another physically settled futures exchange that’s launching soon is CoinFLEX, which will offer investors the ability to trade physically settled crypto futures with 20x leverage.
While the above crypto services may be impressive and attractive to Wall Street investors, perhaps the most attractive option will be the trading desk launched by Fidelity Investments. Fidelity’s trading desk will be the first time a Wall Street firm offers trading and custody services in the cryptocurrency market to investors.
All in all, it appears that the crypto industry may see Wall Street get off the sidelines and invest in crypto in 2019.
Wall Street investors sat back and watched the show in 2018, but with increased OTC buying and new institutional developments such as the ones mentioned here, we can expect to see some action this year.
Do you think Wall Street will invest in Bitcoin and Crypto in 2019? Have they already been accumulating at low prices? Let us know what you think in the comment section below.