Spencer Bogart, a partner at major cryptocurrency venture capital firm Blockchain Capital, said that the institutional sector of Bitcoin is only getting stronger.
Although the valuation of the cryptocurrency market has dropped by 85 percent since achieving $816 billion in January, with the involvement of Nasdaq, Fidelity, NYSE, Bakkt, and large financial institution, the venture capital investor said that the infrastructure supporting Bitcoin is strengthening rapidly.
In late 2017, when the cryptocurrency market experienced one of the largest bull markets in recent history and the Bitcoin price surpassed $19,000, retail traders and individual investors mostly drove the market to new highs.
In the long-term, Bogart stated that the establishment of a strong infrastructure with security, investor protection, liquidity, and compliance will facilitate the inflow of capital from institutional and accredited investors.
Already, endowments like Yale have reportedly made investments in the cryptocurrency space through regulated funds and a growing number of financial institutions have started to serve as custodians to facilitate deals for large-scale institutions.
Meanwhile, the institutionalization of the asset class and the ecosystem itself are only getting stronger. We’ve seen endowments like Yale, Harvard, and MIT move into the space. We’ve seen Nasdaq and Bakkt start to move into Bitcoin derivatives. We’ve seen qualified custodians move into this space. And lastly, and perhaps the most encouraging thing is the quality of the talent we’re seeing entering the space.
The next rally of cryptocurrencies could be triggered by a new group of established and accredited investors, and Bogart emphasized that he believe the dominant cryptocurrency could reach a value of $50,000 in the long run.
Despite the negative sentiment in the market and the falling prices of cryptocurrencies, the digital asset industry has seen progress in institutionalizing the asset class and building products that could allow the market to appeal to investors in the traditional financial sector.
Whether Bitcoin is at $3,000 to $10,000 is of little interest to institutional investors; the crucial element to driving institutional investors is the infrastructure surrounding the asset class through regulated and well-structured investment vehicles.
“Could Bitcoin go to $50,000? absolutely. It doesn’t have the same kind of price to earnings that normally puts a kind of an upper bound or a ceiling on a typical kind of early stage technology company. So with Bitcoin, absolutely it can go that high. How long will that take? I’m not sure,” the investor added.
To most investors, Bitcoin is still an early market at its infancy in terms of liquidity, infrastructure, and merchant adoption.
Many regulators and governments like India remain unclear on how to regulate the cryptocurrency space and implement practical policies that could benefit both investors and businesses in the market.
As the market gains increasing regulatory clarity and sees growing efforts from leading financial institutions to improve the market’s infrastructure, the asset class could begin to see an increase in the inflow of capital from institutional investors and through strictly-regulated over-the-counter (OTC) exchanges.
Featured image from Shutterstock. Bogart photo from LinkedIn.
Last modified: June 14, 2020 9:35 AM UTC