- Bitcoin is now becoming a new investment class
- Many investors now have full confidence in the digital asset
- Stablecoins are seeking to create a form of price stability
The number of institutional investors trooping into cryptoshpere is rising steadily while retail investors are slowing down. Morgan Stanley reports that Bitcoin is now becoming “a new investment class.”
Full Confidence in Bitcoin
The October 31, 2018 report, dubbed “Bitcoin Decrypted: A Brief Teach-In and Implications,” was compiled and released by the American-based Investment Bank Morgan Stanley and says the bank’s research division observed Bitcoin’s trend for the last six months to come up with the conclusion. The report revealed that over $7.11 billion worth of cryptocurrencies was being managed by hedge funds and private equity companies since January 2106.
The report notably emphasizes that Bitcoin, which it refers to as “digital cash,” is a “rapidly morphing theses” and that investors now have full confidence in the digital asset. The report says further Bitcoin is fast becoming a solution in the financial system and becoming a new payment system and ultimately becoming a new institutional investment class.
The report states further that several issues and discoveries surrounding the Bitcoin ecosystem have caused the thesis to evolve. This includes the permanent ledger that records every transaction, hard forks, several hacks, new technologies that are more affordable, market volatility and other related concerns.
There is evidence that leading financial institutions are now boldly involving themselves in Bitcoin, giving further credibility to the report. For instance, the report cites the latest developments including Fidelity’s new division created to deal with crypto services, the recent fundraising by Coinbase and investments by several multinationals in Binance, BitGo and Seed CX to name a few.
The report also cited the main challenges that clients have had with the cryptoshpere and singled out regulatory uncertainty, lack of regulated custodial services and the absence of large financial institutions in crypto space.
Emergence of Stablecoins
The emerging issue of Stablecoins did not miss out as the report calls them types of cryptocurrencies that are seeking to create a form of price stability. The report notes that Bitcoin was increasingly moving towards trading against the Stablecoin USD-Tether (USDT), because most cryptocurrency exchanges do not accept fiat currencies contributed in this state of affairs. The report’s authors explained:
“USDT took an increasing share of BTC trading volumes as cryptocurrency prices started falling. This occurred because many exchanges only trade crypto->crypto and not crypto->fiat. Trading crypto->fiat requires going through the banking sector which charges a higher fee.”
Crypto startups are quickly joining the trend while cryptocurrency exchanges and crypto companies are developing their own Stablecoins so they can become part of the new wave of development.