Two US-based crypto behemoths, Coinbase and BitGo, will continue to facilitate growing demand for Bitcoin from institutional investors by operating as trusted custodians.
Earlier this week, BitGo was approved by South Dakota regulators to create and operate a crypto custody solution, while Coinbase established a new office in New York exclusively to handle institutional demand into the market.
In an interview with CNBC Fast Money, BitGo CEO Mike Belshe stated that the cryptocurrency market needs fresh capital to initiate a new mid-term rally and properly recover from its 80 percent correction in 2018.
Belshe said that the market has not seen many new buyers emerging in the past eight months. But, with the introduction of several crypto custody solutions offered by BitGo, Coinbase, and potentially regulated financial institutions like Goldman Sachs, Citigroup, and Morgan Stanley, billions of dollars in new capital will hit the Bitcoin market.
“What Bitcoin needs is fresh capital coming in, so we haven’t seen a lot of new buyers coming in. So to the extent that Wall Street represents that, yes, Bitcoin needs that, and I can tell you anecdotally that the institutional herd is starting to move their feet a little bit, but they have been taking much longer than I expected… This [custody product] is making me much more optimistic, and this [may be] the solution [that institutional investors have been waiting for].”
Initially, in 2013, BitGo was launched as a blockchain security system, providing multi-signature security services to protect large-scale exchanges like Kraken, Korbit, and UPbit, the biggest cryptocurrency exchange in South Korea.
As the cryptocurrency market started to evolve, BitGo acquired Kingdom Trust, a trusted custodian that oversees more than $12 billion in assets, to facilitate the demand from institutions for Bitcoin. At last, in September, BitGo received the approval from the US government to operate a crypto custody, and is now preparing to serve institutions.
The entrance of BitGo into the institutional market of Bitcoin and the expansion of Coinbase’s crypto custody service which was launched back in July are expected to eliminate the final barrier between institutions and the crypto market that prevented large-scale investors from committing to the new asset class.
In his interview, Belshe emphasized the necessity of a new wave of capital hitting the cryptocurrency market. But, in 2017, Bitcoin achieved an all-time high of $19,500, with the price of BTC surpassing $24,000 in South Korea, without the involvement of institutions.
Investors remain highly optimistic in the long-term growth of the market and what the cryptocurrency market would be like with the participation of pension funds, hedge funds, and a wide range of institutions.
At this rate, as billionaire investor Mike Novogratz previously said, the next rally of crypto could be fueled by fear of missing out (FOMO) amongst institutional investors, as long as the infrastructure is robust enough to handle the demand.
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Last modified: March 4, 2021 3:40 PM