I follow Teeka closely, a real crypto-currency expert, and it sounds like Wall Street will be joining the party big time in 2018.
Prices are likely to explode upwards.
You’ve been talking about the tidal wave of money coming into cryptos all year.
Teeka: It’s not going to be a tidal wave… It’s going to be the biggest ocean of money in the history of the world.
And that money hasn’t even hit the markets yet. The opportunity in cryptos is just beginning.
But back to your question. Here’s why institutional demand is much bigger than I initially thought…
These institutional investors will be able to trade the new bitcoin futures contracts later this year. But that’s not the same as owning physical bitcoin. Right now, they can’t own bitcoin because of an issue called “custody.�
You see, these large funds can’t hold onto their own investments. Most of them have contracts that state a third party will hold onto their assets as a custodian. This rule is in place to protect investors from potential fraud.
So, these funds have institutions like Morgan Stanley or Goldman Sachs have “custody� of their investments.
There are no institutional-grade custodians for cryptocurrencies yet. They need that piece in place before they can put money to work in the actual bitcoin market.
Think about it being the difference between owning a futures contract on gold and actually owning gold bars.
A futures contract can be held in a brokerage account whereas a gold bar needs to be held in a physical vault. As I said, right now there are no bitcoin “vaults� approved for institutional use.
The good news is that will change next year. A slew of new companies is rising up to meet the custody challenge.
Once custody is in place, the stage will be set for institutions to trade in the physical bitcoin market. And when that happens, billions—or even trillions—of dollars will be flowing into the space.
And I hope everyone has an allocation to bitcoin before this money flows in. The move is going to be huge.
