When Will Crypto Become A Mainstream Investment?
Cryptocurrency is still somewhat niche. The total crypto market cap may well be above $400 billion, but that only makes it little larger than the market cap of the Norwegian Stock Exchange. Most of those holding and profiting from crypto — the cryptovestors — are not typical investors. Some are coders who stumbled into crypto projects, some are security experts seduced by the innovation, and one or two are angel or VC investors who were on the hunt for the next new thing.
You could have seen it that way on Jan 1, 2017 when the crypto market cap was a mere $18 billion, just a little larger than the Budapest Stock Exchange. But in March, the crypto market began to grow like bamboo in spring and sparked “crypto fever” among adventurous investors. The market cap has risen over 10x in less than a year with large numbers of crypto novices jumping onto the bandwagon.
Wall St was sure to notice, and some hedge funds already had. On Jan 1, 2017 there were a mere 26 crypto hedge funds. By Nov 1, 2017 there were 110, presiding over $2.2 bn of investment. Hedge funds are not mainstream investment machines, but they’re closer to the mainstream than crypto exchanges. Sometime around July, the idea of a SAFT — a crypto token presale modeled on SEC guidelines applied to traditional presale-type investments (or link my primer blog post) — took root, and took off. (Permission.io, formerly Algebraix, conducted a SAFT, if you hadn’t noticed).
In October, the Chicago Mercantile Exchange (the commodity exchange) announced that it was preparing a Bitcoin futures contract and Overstock.com announced a SAFT for its tZERO token to finance a US regulated Alternative Trading System (ATS) — an SEC approved exchange that will be capable of trading tokens issued via ICOs and SAFTs. It is expected to attract business from global institutional funds.
A Crypto Index
Another straw in the wind was asset manager Reality Shares announcing a collaboration with Nasdaq to launch the Reality Shares Nasdaq Blockchain Economy Index. The index will monitor the performance of global blockchain-oriented companies and Reality Shares will launch an exchange-traded fund (ETF) to track the index. It filed for SEC approval on November 2.
The natural question to ask is which companies will be in this crypto index. We will not know until it is launched, but the Reality Shares press release suggests it will include the likes of: Accenture (heavily involved in many blockchain projects), SAP (running a collaborative blockchain innovation program) Hitachi (founding member of the Hyperledger project and active with the NEM-based Mijin blockchain platform, Overstock.com (mentioned above in respect of the tZERO project) and HIVE Blockchain Technologies Ltd, (blockchain infrastructure company that is involved in a cryptocurrency mining facility in Iceland).
You don’t need a weather man to know which way the wind blows. At the beginning of 2017 there were regular rumors about governments, even the US Government, stepping in and banning cryptocurrency trading. But it never happened. It never even came close to happening.
It is now clear that the US financial sector is embracing cryptocurrency and doing what it can to legitimize the whole crypto investment market. So, when will crypto become a mainstream investment? Now.
It is already entering the investment mainstream.
Robin Bloor Ph D. is the Technology Evangelist for Permission.io, author of The “Common Sense” of Crypto Currency, cofounder of The Bloor Group and webmaster of TheDataRightsofMan.com.
