Big institutions still investing heavily in cryptocurrency
Massive financial institutions remain unmoved in their plans to plough billions into investing in cryptocurrency, despite the current slump in values across the markets.
Bitcoin fell off its lofty perch at almost $40,000 ten days ago, thumping hard onto a $25k ledge last Thursday.
The fall left traders scratching their heads as global markets, US interest rates, lockdowns in China and the debacle of the collapsing Terra/Luna ecosystem conspired against any possible quick route back for digital assets.
However, the turmoil of recent days doesn’t appear to have troubled profit-hungry leviathans such as Barclays and Goldman Sachs from an unwavering focus of pumping enormous amounts of funding into cryptocurrency.
In fact, despite the background noise of market doom and gloom rising in volume, the chief of Goldman Sach’s digital assets says the company has been “actively broadening” its interests after stating demands for cryptocurrency from institutions had escalated.
The US banking giant even joined with UK counterpart Barclays this week to help a $70 million funding round for Elwood Technologies – an institutional crypto trading platform and brainchild of billionaire British hedge fund manager Alan Howard.
With input from Commerzbank, Galaxy Digital and Dawn Capital, the Series A round valued Elwood at $500m.
While the funding had been in motion long before the recent price drop, Elwood says it still believes institutions remain committed to investing in crypto.
“We’re getting investment from financial institutions that aren’t expecting to get massive returns in 15 minutes,” said James Stickland, CEO of Elwood Technologies.
“They’re investing in the infrastructure – I think it’s a reassurance message.”
According to Anton Chashchin, managing partner at Bitfrost.io, the move from Goldman Sachs and Barclays should be viewed as an example of the growing integration of traditional finance and crypto.
“$1.14tn worth of cryptocurrencies were traded by institutional clients in 2021, up from $120bn the year before,” he said.
“Aside from major financial institutions, large companies and even some governments are entering the market.
“There has been a major shift in the perception of cryptocurrencies among institutions and the ecosystem continues to mature in a very exciting way despite the current crypto run. While they are still perceived as a risky asset, an understanding of the industry’s prospects is prevailing.
“However, these institutional investors lack a sufficient understanding of how these assets work. Ultimately, crypto trading is still in its infancy.”