Top market makers ICE and Goldman Sachs are now getting into the cryptocurrency trading and futures space. But what’s next and how does that impact your crypto investments?
Decentralization and a lack of clear regulations have played a significant role in the ups and downs of cryptocurrency. While this has certainly contributed to the surge in crypto’s global popularity, it has also largely kept institutional investors away.
Of course, this doesn’t mean that there hasn’t been any interest on the part of institutional investors. With trillions of dollars in global wealth at their disposal, many of these individuals have been salivating at the potential returns that could come from cryptocurrencies. But without institutional partners to help them facilitate these transactions, such interactions have been largely off limits.
In early May, Goldman Sachs launched a cryptocurrency trading desk. Earlier in the year, Intercontinental Exchange Inc., or ICE, the parent company of the New York Stock Exchange, announced it would provide a cryptocurrency data feed in a partnership with Blockstream. ICE has since publicly mulled over the possibility of launching its own crypto futures desk.
Though cryptocurrency has previously garnered minimal investments from larger institutions, money managers and hedge funds due to its volatile nature, these tentative changes in attitude hint at what could be larger shifts for the industry as a whole.
Signs of the Times
Goldman Sachs and ICE are hardly the first of their kind to make such moves in the cryptocurrency market. CME Group and Cboe Global Markets both introduced bitcoin futures contracts in December 2017.
While these moves didn’t have as big of an initial impact as expected, it is clear that such decisions have had an influence on other major traders, especially as bitcoin miners become increasingly involved in futures investments.
For cryptocurrency developers, the main takeaway from such changes is growing acceptance for their industry. “Any indication of further mainstream adoption will have an impact on price, even before there is significant institutional activity,” says James Tabor, CEO of Media Protocol, a smart URL developer. “These market arrivals are expected to bring huge amounts of institutional money to the markets.”