Illusion or reality? Crypto demand either faltering or poised to charge

BlackRock is the world’s largest asset manager, so when its CEO, Larry Fink, remarked recently that he was seeing “very little in terms of investor demand” with regard to crypto and Bitcoin (BTC) based on “my last two weeks of business travel,” it set off some alarm bells.

A lively Twitter discussion followed one commentator’s remarks of how BlackRock was simply protecting its legacy bond business, given that “Goldman Sachs, BNY Mellon, State Street, Morgan Stanley, all entered the space in response to demand.” Furthermore, BlackRock is the second-largest owner of MicroStrategy (MSTR) stock, regarded by many as a pure Bitcoin play.

As has been recounted, Bitcoin reached its all-time high of $64,000 on April 14 but soon thereafter plunged, and it has now been trading at roughly half its April high for weeks, as have many other cryptocurrencies. Some users are understandably nervous.

Moving beyond market cycles

Perhaps it is better to adopt a longer-term view regarding recent events. “Two months is a very short time period in crypto,” Bitwise chief investment officer Matt Hougan explained to Cointelegraph, adding, “I’m not sure what to make of Fink’s comments, except that they don’t align with our day-to-day experience.”

“Institutional investors take 12–36 months to do due diligence,” Jeff Dorman, chief investment officer of digital asset management firm Arca, told Cointelegraph, adding further, “They aren’t timing market cycles. They are trying to get comfortable with the asset class to make a 10-year-plus commitment.”

“It’s important to remember that the market is up more than 200% in the past 12 months, making it the best-performing asset class in the world over the last year,” added Hougan, who claims to see continuous inflows into Bitwise.

Moreover, crypto and blockchain technology is a global phenomenon, and one has to be careful about drawing worldwide conclusions from American or European events. BlackRock, for the record, is based in New York City. “It doesn’t feel like a crypto winter here in Asia,” Justin d’Anethan, head of exchange sales at Singapore-based EQONEX, told Cointelegraph, adding:

“While prices falling have definitely dampened some of the enthusiasm, we’re still seeing a clear interest for crypto and crypto- and blockchain-based ventures. If anything, the stagnation in the lower 30,000’s was/is seen by many as an opportunity to get in.”

Elsewhere, Emin Gün Sirer, Cornell University professor and creator of the Avalanche blockchain protocol, told Cointelegraph China recently that hedge funds aren’t the only institutional players probing the crypto waters these days: “I have been getting contacts from retirement funds, […] far more slower-moving but with maybe 10 times more dollars under their control, and they are slowly coming into crypto.”

Also, Fidelity Digital, an institutional pioneer in the crypto space, has been aggressively expanding lately — boosting staff by 70% due to “strong crypto demand,” including 100 new workers in Dublin, Boston and Utah, as Fidelity Digital president Tom Jessop told Bloomberg. The firm sees more demand from retirement advisors as well as companies, and it is broadening its product offerings accordingly. “We’ve seen more interest in Ether, so we want to be ahead of that demand,” said Jessop. Megan Griffin, a Fidelity Digital spokesperson, told Cointelegraph:

“We haven’t seen a material change in [crypto] demand during the [post-April 14] drawdown, given institutions tend to hold a long-term view and are experienced in managing through cycles.”

Dorman was even more emphatic. “The interest in digital assets from new investors has accelerated — not slowed down,” he said. “Any slow down with allocations is more a function of summer than it is price.”