The value of Bitcoin has fallen by three quarters this year, sending the original crypto-currency and the largest one back to levels not seen before its bubble. And the price is not the only aspect of the trading that has changed.
Retail investors responsible for the rapid rise of bitcoin to a record of nearly $ 20,000 last December have fled, leaving the first promoters and companies related to cryptography, which traditionally dominated the volumes of digital currency trading by boosting volumes current
And while large investors, from private operators to hedge funds, are increasingly active, major financial companies have stayed away from cryptocurrencies, even as the market infrastructure that is considered key begins to be built.
The information on this industry suggests that bitcoin is struggling to evolve from a speculative asset favored by relatively specialized investors to an investment option in the same league as stocks or bonds.
This institutional advance is considered key to the future of the sector and promises to help finance the development of cryptographic currencies and to spread their use in the real world for purposes such as payments and money transfers.
The monthly volumes of criptodivisas trade in the main exchanges reached 235,800 million dollars in November, an increase of three times since the first stages of the bit-coin bubble in September 2017, but still, almost half since its creation. peak a year ago, show data from the CryptoCompare industry website.
In the same period, volumes at major retail exchanges, such as Coinbase, based in the United States, and Poloniex, owned by Goldman Sachs-backed Circle, were down 22 percent and 74 percent, respectively. Japan’s bitFlyer has also suffered, with a volume decrease of 47 percent last month.
As retail customers dissipate, volumes have soared on stock exchanges like Bitfinex that are favored by big investors.
This is due to the growing activity of a mix of cryptocurrency miners and start-up companies with large assets, as well as prop traders, hedge funds and wealthy individuals and families, industry insiders say.
“Larger exchanges are taking over and gaining market share, while retail exchanges are receding,” said Charlie Hayter of CryptoCompare.
When asked about the figures, Coinbase said that trade in the cryptography sector was growing. Poloniex said the data reflected the movements of the market in general. BitFlyer declined to comment.
CryptoCompare data covers most major markets, and the company adds new markets to its database when its volumes reach significant levels.
Bitcoin traded Friday with 15-month lows around $ 3,400.
Cryptocurrency markets are difficult to calibrate accurately, given the lack of centralized data and the opacity of major markets, such as over-the-counter trading, which is said to account for up to 50 percent of the total market.
Similarly, there are few ways to accurately break down the profile of investors in the cryptography market.
But leading industry figures interviewed by Reuters said that institutional investors, such as asset managers, pension funds and investment banks, remain largely absent from the bitcoin trade, even when the market structure is changing.
The majority is concerned about the lack of clarity about regulation, as well as the frequent violations of security on stock exchanges and the perception of the absence of the fundamental value of assets.
That reluctance has remained even as the way in which cryptocurrencies are traded and stored safely, especially by Fidelity Investments, and as a number of small jurisdictions such as Gibraltar and Malta try to grant licenses to cryptography companies.
A clearer regulation will give a seal of legitimacy to cryptocurrency companies and will eliminate actors that do not meet the standards, analysts say, and can alleviate the concerns of institutional investors about compliance with the rules.
“Some professionals from banks and financial companies want to intervene, but can not determine how to explain it to senior management,” said Eric Wilgenhof Plante, compliance director of BeQuant, a stock exchange that serves some 600 clients, mostly non-retailers.
But despite the work of startups and large companies, promoters and stock exchanges, the main investors have remained on the sidelines.
“You have seen some historical decisions by Fidelity to actively participate in the cryptocurrency space,” said Danny Masters, president of CoinShares, the digital asset manager.
“But nothing is really going on yet.”
Also published on Medium.