Two executives at Wave Financial, an asset management firm providing bespoke strategies to high-net-worth individuals and entities, have reported seeing increased institutional demand for crypto products amid the bear market.
At the Blockchain Futurist Conference in Toronto on Wednesday, Wave Financial’s head of business development Mike Jones said institutional investment in crypto could be driven by the high end of wealth management firms including Morgan Stanley, Merrill Lynch and Goldman Sachs looking for ways to allow their clients to get exposure to the space. Jones cited the example of BlackRock partnering with Coinbase on Aug. 4, a move that will give users of the asset manager’s institutional investment management platform Aladdin access to crypto trading, custody, prime brokerage and reporting capabilities.
In addition to wealth managers, the Wave exec said venture capital may see “a lot of growth” in part due to demand for innovative investment vehicles. Wave Financial’s investment and venture principal Gerard Berile added that VCs giving clients exposure to crypto without going through centralized exchanges and still dealing in large scale volume has been a “net positive for the industry as a whole.”
“On the venture side of the house, the bear market has been somewhat of a positive thing,” said Berile. “Over the past year, year and a half, we’ve seen valuations of a lot of different companies get incredibly high — a bit frothy, you could say. In the past six months or so, we’ve seen valuations on companies come down to a bit more realistic valuations, and it’s become a great time to begin allocating capital.”
“What’s encouraging from a market perspective in general is that you think about the last cycle — a few years ago, a lot of the chatter that was surrounding the ecosystem then was: ‘Is this the end of crypto? Is crypto dead?’” said Jones. “From an institutional adoption standpoint and an institutional demand standpoint, the question now seems to be much more surrounding ‘Is this the right time to get in?’”
“Things are much more encouraging, even though this is clearly a time of pain. That comes with opportunity as well, particularly for people that are building in the space.”
Data from the blockchain seem to support some of Berile’s and Jones’ claims. Crypto intelligence firm IntoTheBlock reported in March that the number of large transactions on the Cardano blockchain increased more than 50-fold in 2020, suggesting “increasing institutional demand.” However, United States regulators have not approved certain crypto investment vehicles like an exchange-traded fund with direct exposure to Bitcoin (BTC) — many have said such a listing could attract new investors to the market.