With a lot of interest in pensions, hedge funds, mutual funds, and endowments in the crypto sphere, the cryptocurrency wallet company ‘Blockchain’ has announced a new product that will specifically target individual investors.
The platform will be known as Blockchain Principal Strategies and it will offer institutions and family offices services such as customised access to markets as well as research.
As well as these services, an over-the-counter trading desk will be offered to all investors and it will function as a ‘matchmaker and direct counterparty to clients, executing trades and managing associated risk’. The firm’s clients will also be able to avail themselves of managed investment offerings which will include exclusive access to vetted and verified token offerings.
Clients will also be able to make direct equity investments in startups that show promise.
Institutional Sales and Strategy head at Blockchain, Breanne Madigan said:
“…we will also offer educational and networking opportunities with hopes of creating a broader, well-informed community around digital currencies moving forward,”
Drawing on industry momentum
This new project which is aimed at institutional investors draws on the momentum that has been growing steadily in the last few months. According to research that has been conducted by Willis Towers Watson, it appears that mutual funds, insurance funds, foundations, and pension funds inter alia, contribute approximately $131 trillion of the world’s wealth.
It is hoped that including large investors in the crypto market will help to give the industry a much-needed boost when it comes to legitimisation.
Ari Paul, the Chief Investment Officer of BlockTower Capital told CNBC that: “Even a small dollar amount is legitimizing. If that happens, every family office says, ‘Oh, Yale’s in. That gives us the excuse.’”
Whilst the amount of interest in cryptocurrencies from institutional investors is increasing, it could be argued that they are a little under-allocated, particularly when it comes to BTC. A scholarly research paper that was written last year by an assistant professor at the John Hopkins University Carey Business School and several other stakeholders, stated that BTC was unlike any other asset classes and it was a great way for investors to diversify their portfolios of investments.
A higher Sharpe ratio
The paper also highlighted the fact that whilst BTC has a high price volatility, those institutional investors that choose to invest in it stand to enjoy a higher Sharpe ratio than any other traditional asset class.
“We argue that the institutional investor should seriously consider cryptocurrencies for inclusion into their portfolios at the 1-2% allocation range … Although this market is relatively small, with less than $300 billion in market capitalization and has many other weaknesses that investors must take into full account, we believe in the long run that the early institutional adopters will benefit,” the paper added.