Opinion The Crypto Market is in a Drastic Need for Outside Investors

The Crypto Market is in a Drastic Need for Outside Investors

February 22, 2020

The investment scene in early 2020 is one of a strange and often-shifting landscape. On one hand, there is the factor of the diverse and globalized markets where anyone can take part if they desire. Unlike ever before, stocks and other tradable assets are now accessible from any corner of the world. The same is even truer when it comes to the flow of information and changes that are occurring in the same regional and global markets.

With a simple internet connection and a connectable device, anyone can spend hours and days examining the movements of the markets and trying to figure out where they will land particular prices next.This allowed for the influx of investors who have no prior experience in trading or investing, but arguably, in nothing else either.

The boom of 2017 saw the spectacular rise of the so-called weekend traders and their money swarmed into the market. This was great news for everyone back then and it not only solidified the rise of the prices but also established some bitcoins like ethereum. Today, one might be tempted to say that a repeat of such a process in the upcoming bull run and its complex underlying series of factors would be just what the doctor ordered. However, there is a rising argument that in reality, the crypto domain is desperate for established outside investors.

Carl Icahn Case

The name of Carl Icahn is a well-known sight of the trading and investment domain. He is a wealthy investor who is famous for his willingness and ability to move in and out of different asset classes. The same is very different compared to most other investors who tend to get locked into a single asset class. The same is done so that they can attain a constant and in-depth knowledge of a particular marketplace and thus, in theory, be better equipped to make the right calls. However, even when the level of opportunities is really low, these professional investors and asset managers feel they do not have anywhere else to go, regardless of what opportunities they see (or believe that are lacking).

In those circles, it is easy to label Icahn as someone who is a vulture investor. However, in the world dominated by social media, rising esports, and global markets, such labels do not stand up to reality. Instead, he practices a way of trading and investing that is adapted to the hectic nature of the modern world, instead of trying to stick to old market principles. Icahn has a simple explanation of the work he does – in his words, he simply usually goes out and buys something at a moment when nobody wants it.

Crypto Native Investors

In the last decade, the crypto markets were largely dominated by investors who can be considered crypto natives. They began their trading portfolios with cryptocurrencies – usually bitcoin – and then possibly moved to altcoins later on. However, all of them have in common the fact that they rarely if any attempted to build cross-asset portfolios. Most avoided these traditional markets because they knew very little about them or their procedures.

The differences are too big between these two domains. The same includes the flow of money from and to international patties, exchanges, prime brokerage, and trading algorithms. Presently, this picture is changing somewhat as big traditional entities are entering the same domain. This includes financial powerhouses like CME, Fidelity, and NYSE. Besides them, however, the great majority of investors are still strangers to the crypto market. Furthermore, all of them also believe that the crypto markets are not appealing enough for them to either get more acquainted with any of them.

Finding Equilibrium

The crypto markets need regulation investors because they ultimately bring a sense of equilibrium. By having the presence of investors who are not solely into crypto, the market would see asset rotation and invest on an opportunistic base. This means that the price of bitcoin, for example, could see a stronger sense of equilibrium both at its bottoms and tops.

The same would reduce the insane highs that crypto attains occasionally, but also lower the chances of very hurtful lows that is right now synonymous with this class of assets. Naturally, the same is not easily attained but the market is at least seeing movements that resemble an influx of non-native investors. They and their businesses are more and more exploring the crypto space and as the process continues, some of them will decide to invest there, even if this begins with very small-scale participation.

Overcoming Isolation

Presently, the crypto market as a whole remains a space that is largely ignored, isolated and disregarded by the broader financial community. However, there has been a substantial shift in the way people see cryptocurrency as a whole. This happened quietly and on the edges of the same public awareness, but today, the assessment of bitcoin and crypto market, in general, is different than it was just a few years ago. The reason for this is the fact that after the big market slump of 2018, which followed the record rise in the prices just several months before in 2017.

The crypto winter that followed was labeled by many as the straw that will finally break the camel’s back and that it will showcase an ever-descending line of crypto token prices. Ultimately, that line, according to the crypto skeptics, would reach zero. Here, the market diagram would simulate a bell-shape that would show the records of 2017 as the moment when the bubble burst. However, since then, the market rebound occurs once and it is in the midst of a new one right now.

The crypto market stopped being a scam or a bubble that is forever about to burst. It does have many issues and problems that will need to be fixed if it wants to continue to grow. The influx of external investors is one of those, but not the only one. Yet, it alone could make a big difference if it coincides or kickstarts a new price rally that would establish not just potential records, but also a higher stability level of the entire market.