With the skyrocketing interest to cryptocurrencies and blockchain, big sharks are starting to turn towards investing possibilities in this sphere. Bitcoin price raising up over $7000, total cryptocurrency market cap reaching $200 bln and giants like Microsoft and IBM investing in blockchain technologies sitting behind cryptocurrencies bring the sphere into the rank of the mainstream.
Obviously, this situation caught investors looking for investing instruments to make their fortune on emerging technologies other than simple buy-sell operations. CME Group, the world’s largest options and futures exchange, announced Bitcoin futures trading on its platform. The company has already set the specifications and, in case of getting regulator’s approval, is going to launch the trade by 2018. Leo Melamed, one of the key figures in CME Group, expects major investors to take part in bitcoin futures trading. “That’s a very important step for bitcoin’s history… We will regulate, make bitcoin not wild, nor wilder. We’ll tame it into a regular type instrument of trade with rules,” Melamed told Reuters in an interview. This is definitely not the last news about bringing new risk-leveraging instruments in the sphere, further actions in this field will provide the higher degree of certainty attracting big players.
Another sphere where cryptocurrencies are invading rapidly is capital markets. In accordance to IPO, more companies are launching Initial Coin Offerings (ICO), launching more and more new tokens. First ICOs are dating 2013, but the real boom was observed in 2017 when the overall deal value for 3 quarters so far exceeded 2016 value by more than 10 times and reached $2.3 bln. As for now, the highest amount collected is $257 mln by Filecoin. Recently, the number of monthly number of ICOs overcame 50 and will certainly be growing. Considering the above, no wonder that numerous crypto funds started to pop up in the middle of 2017. The most prosperous of them, like Polychain and Metastable, received major interests from top venture funds and other investors. Today, Polychain now has over $200 mln of assets under management. And this is only top of the iceberg. There’re more than 50 crypto funds being actively backed and raising their trade volumes. All these factors let us forecast new volume records being set with an appalling frequency and number of crypto funds multiplying in the near future.
Although cryptocurrency sphere is gaining ultimate interest in the world of investing, big players and don’t rush to get into the race. The main point repulsive for these guys lays in huge risks laying under new technology. Bitcoin, the main currency proved itself as interesting trading subject, has unpredictable volatility, that doesn’t allow to calculate risks. In other words, there’re not a lot of market players who really understand how it works and still have a fear of unknown. But this tends to change soon. As the answer for demand from the “big guys”, more advanced risk-downgrading tools are to be developed and introduced to the market. Returning to Mr. Melamed’s statement, it will transfer cryptocurrency trading into clear investment tool attracting major institutional investors. But, as for now, bitcoin trading can be considered fortune-making instrument for risk-seekers rather than serious investors.
As for ICO, major risks are observed in governmental regulation. The cryptocurrency world was shocked by South Korean and Chinese regulators forbidding all the ICO actions. This led to a huge sale of tokens and a drop in a huge amount of token prices. The US SEC has already paid attention to the ICO activities and proposed to perceive them as investing activity and to apply federal securities law to them. The organization stated that it would guarantee the better level of transparency, prevent fraud and therefore attract institutional investors. Other countries are already working on the ICO-regulating laws, are considering developing ones or have already provided recommendations on working with ICO within the law. So, considering the governmental influence on this sphere, it is not completely clear how it is going to progress in different countries: either it will be put in the frames of law to secure the investors or will be banned.
Overall, cryptocurrency activities are steadily entering the world of investments and can be concerned as high-risk investment instruments, but as the regulatory and market infrastructure has not been developed yet, institutional investors don’t pay serious attention to the possibilities they may provide. Reed more.Follow me in social media: