[ I N - D E P T H
in cryptocurrencies. Novogratz
told participants at the Reuters
Global 2018 Investment Outlook
Summit that he expects major
financial firms will soon start to
offer bitcoin or similar products as
an investment option that could be
easily purchased over the phone
which will make it easier to per-
suade institutional investors to join
wrong so they don’t take their
biased views against bitcoin very
seriously. Fear of missing out is
real. All can see that holding digital
global money will be the norm
inside ten years.”
Undeveloped infrastructure
While bitcoin remains pre-main-
stream, Robinson says that the
“The starting point is the question of whether or
not cryptocurrencies are actually currencies or
rather an innovative yet highly speculative new
asset class.”
MARTIN HOCHSTEIN, SENIOR INVESTMENT
STRATEGIST, ALLIANZ GLOBAL INVESTORS
the fray. Other alternative funds
are seeing a clamour from family
offices and private banks to get into
the cryptocurrency.
“The more bitcoin has climbed
this year, the more family offices
and high net worth individuals
want access via their private
banks,” says Lee Robinson, chief
investment officer of $400 million
London-based hedge fund Altana
Wealth. “Clients remember how
the banks told them to not invest
in tech in the late 1990s and were
institutional move to the asset will
occur and investors like Altana are
perfectly positioned to thrive on
this.
“What is holding back a bigger
tide is undeveloped infrastructure
in the crypto capital markets, ex-
changes, trading pipes, and regula-
tory uncertainty around the whole
sector,” says Lee Solokin, global
director at Autonomous NEXT.
“Once crypto custody is built and
institutional trading can be done
by FIX (Financial Information
|
B I T C O I N ]
Exchange protocol) the path in will
be much easier.”
It is essentially the need to con-
nect traditional finance operational
technology to the cryptocurrency
operational stack. Getting the
connection is not easy, howev-
er, as cryptocurrencies are built
around very different concepts
to traditional assets, with decen-
tralised exchanges—the likes of
Airswap—holding sway. Nonethe-
less, traditional participants have
been eyeing the market and indeed
working to create new instruments
to broaden the market’s appeal.
The most recent and significant of
these is the Chicago Mercantile Ex-
change (CME) which announced
proposals to launch bitcoin futures
in October. [SEE BOXOUT].
On the other side, product pro-
viders have been hitting the market
with certificates and structured
products to entice investors get
into the business. Leonteq, a Swiss
derivatives specialist, launched
a short bitcoin certificate which
allows investors to get exposure to
downward movements of bitcoin
with a conversion ratio of 0.1. The
company says it has had numerous
requests from clients to short bit-
coin and is confident the product
could appeal to institutions too.
The expansion ability to carry
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