The crypto market has been in a major bear market since the start of 2018 and one of the major reasons for this is growing regulatory scrutiny and legislative uncertainty. However, in the last two weeks, a new wave of optimism has hit the market and reports indicate that big financial institutions have entered the market.
According to the latest report by Thomson Reuters, this year of 2018 could witness one of the biggest capital inflows in the crypto markets as financial institutions get ready to pump billions of dollars. The report shows that one-in-five financial institution is investigating the possibility of trading in digital currencies over the next 3-12 months.
This survey by Thomson Reuters includes inputs from 400+ clients spread across all of its trading solutions like FX platforms, REDI, and Eikon. The report shows that of the total number of clients being surveyed, 70% of them want to begin in the next 3-6 months while remaining 22% in 6-12 months.
“Cryptocurrency is still a relatively small part of the trading market, but this survey indicates this niche segment is starting to enter the mainstream of the financial services industry. This is a major change from a year ago,” said Neill Penney, co-head of Trading, Thomson Reuters.
He also added: “The current priority for our clients appears to be seamless access to news and data around cryptocurrencies to facilitate informed trading decisions. As a leading provider of news, data, and trading capabilities, Thomson Reuters is well-positioned to deliver solutions that address client demand in the growing cryptocurrency market.”
Sam Chadwick, director of strategy and innovation at Thomson Reuters said that financial institutions started taking interest in the crypto assets during the last quarter of 2017 when the market was skyrocketing. Although the crypto markets slowed down in 2018, Chadwick says that asset managers and hedge fund specialists have rather gone more serious while waiting for the markets to get stable and are looking for opportunities to enter at the right time.
Moreover, under the growing uncertainty of regulatory measures, institutions would likely be waiting for the air to get clear before taking any further move.
While talking to CCN, Chadwick said that Thomson Reuters first conducted a formal survey in January 2017, when the markets were not quite heated. Chadwick said that at that time, he received cold responses and “blank stares”. With crypto markets being at the peak by the end of 2018, even Thomson Reuters considered providing prices for Bitcoin and other cryptocurrencies via its flagship financial desktop platform Eikon.
Chadwick said: “That was one year ago. And then coming into the end of last year into Q4, prices of cryptocurrency assets went bananas. Bitcoin started soaring. That landing page we created for bitcoin inside Eikon moved up to be No. 2 of all the FX landing pages after the euro.”
Chadwick, however, denied naming its clients who were surveyed due to the sensitivity of the topic except for saying “It was a combination of the large buy-side organizations — asset managers and hedge funds — as well as some of the bank trading desks.”