Crypto in 2021: ‘all bets are off’, institutions are coming, experts say
On 27 January 2021, Cindicator’s Singapore Crypto Trading Summit gathered cryptocurrency traders, investors and builders, including hedge funds, VCs, startups and companies like Bloomberg, IBM, and BitGo. Experts agreed that institutional adoption is poise to increase this year and beyond.
The full recording of Singapore Crypto Trading Summit is online and below is a summary of some key points from the speakers.
What are the main trends in crypto?
William Bao Bean, General Partner at SOSV:
“One of the biggest drivers is crypto going mainstream. … In the US, every day CNBC, pundits, and mainstream asset managers with large AUM are talking about crypto, mostly Bitcoin. … Don’t underestimate the power of mass-market and traditional institutions coming into the market. This is the trend and I don’t think it’s actually driving the recent run-up — that run-up is probably the expectations of institutions coming in. But the amount of exposure coming into the market has and will be the main driver for the next 2-3 years.”
Benjamin Tsai, President & Managing Partner at Wave Financial:
“I’m seeing a lot of commitments from institutional franchises. … We’re now seeing people involved full effort: Standard Chartered has announced a joint venture with Northern Trust to do custody. One of the recent ones I was really impressed with is DBS out of Singapore starting to support crypto as a very mainstream format of payments. They’re building that into their FX desk for institutional clients, this is not a little sub-division in a separate office — it’s the FX sales guys who are now also selling crypto. … We will see other institutions come in, that adoption will also help drive liquidity. There will be fewer questions ‘where do I buy crypto’.”
Patrick Tan, General Counsel at Novum Capital:
“In Singapore, we were one of the first to institute a digital payments act to deal with digital currencies. … What I’m really excited about is to see Janet Yellen appointed as US Treasury Secretary, she doesn’t need any guidance on how to use an iPhone. And excited to see Gary Gensler as the head of the SEC, he taught a course on blockchain at the MIT. That’s helpful — if you don’t understand the technology, then you can’t regulate. Without regulation, institutional participation is just not going to happen.”
What is different this time?
Christina Qi, CEO at Databento:
“In 2017, every other hedge fund event was about crypto. And many of the answers were similar: ‘institutions are going into crypto’. But 2021 is really different. Back then, the average total volume across all exchanges was just $5 million. That’s really tiny. In 2017, CME did their Bitcoin involvement as a purely PR momentum.”
Patrick Tan, General Counsel at Novum Capital:
“This is 2021, all bets are off. A lot of the Asian family offices were more than willing to take a gamble on crypto: ‘I don’t know what does, but I’ll roll the dice’. When too much retail would come it, we really have to start to be careful about bubbles and pullbacks.”
Crypto forecasts for 2021
During the second session Constantin Kogan of Wave Financial and Jesus Rodriguez, co-founder of IntoTheBlock, discussed predictions by Cindicator’s Hybrid Intelligence. Our very Sungjung Kim led that insightful discussion.
To pique your interest, here are the results of the first question that was posted to Hybrid Intelligence.
Watch the full video for more predictions and experts’ comments.
Which institutions are joining now and why?
In the final session of the day, panelists discussed institutional adoption in crypto.
Alrick Oh, Partnerships Manager at Coinhako:
“A lot of VCs, family offices were already involved in the space since 2017. Today what we are seeing is the inclusion of institutions like HFTs, banks, more traditional brokerages. They are looking for new gains, new hedges against uncertainty.”
Nick Carmi, CEO at Bitgo Prime:
“The institutional clients are looking for more diversification from the portfolio risk perspective. They are looking for more diversification in terms of returns. The market in 2020 was interesting, but if you include crypto, you can see that crypto outperformed the entire market. A lot of the institutional clients are constantly keeping the pulse on the crypto space and this got them more excited about it. … We’re seeing a lot of interest coming in, but the barriers to entry are still very high.”
Peter DeMeo, Global Sales Leader at IBM Systems Digital Assets:
“We see four different forces that are going to create the conditions under which a lot of the institutional movement is happening. Regulatory frameworks are being clarified across the board. Singapore is the leader with the payments services act. Central bank digital currencies — the fact that CBDCs are being explored by 80% of all central banks. From a technology perspective, there are shifts that make investing safer through regulated custodians. From the market structure perspective, transactions are cheaper, the volatility is at an all-time low.”
Yuri Lobyntsev, CEO & Co-founder of Cindicator:
“Many of the people who work at institutions are still staying in the shadows. Only about one-third of institutions have publicly announced investments in digital assets. What about the rest? We think they are stepping in the same direction. In terms of assets, Bitcoin is definitely the entrance point to crypto and definitely, institutions are building products around Bitcoin.”
This is it for now. The cryptocurrency space is constantly changing — Stoic, automated crypto trading can help you beat FOMO while trading your crypto on full autopilot.