Strong governance processes, such as due diligence, rather than bitcoin halving, will be the main catalysts for institutional investment in cryptocurrencies, according to Kevin Koh, former partner and CIO of Goldman Sachs & Spartan
According to the executive’s assessment during his Blockcrunch podcast, bitcoin halving would still not be awakening the interest of the institutional investor. The event that will cut in half the reward of miners and reduce the production of bitcoins is seen as a major price trigger. However, for now, only retail investors would be buying this thesis more consistently.
This theme of institutional investment is especially important for the bitcoin market. The entry of institutions such as large fund managers, family offices, endowment funds among others in the cryptomarket, can lead cryptocurrencies to the mainstream and favor the market development.
Institutional investment is approaching
The lack of interest in halving does not mean that the institutional investor is not considering cryptoassets. On the contrary, at the beginning of the coronavirus crisis, many who were already positioned in crypto had to close their positions to cover margin calls in traditional investments. That is, they are already there.
The executive himself endorses this view. “This (the idea that halving doesn’t appeal to the interest of institutions) doesn’t mean you wouldn’t find a CIO that researches the asset class closely having a solid vision and then would like to deploy it. But I would say that for the average institutional investor, that’s probably not what is motivating their decision to invest in crypto”, he says.
Data confirm the executive’s opinion. Recent Bitwise research with 415 managers representing a US$ 24 trillion portfolio of assets showed that 6% of them invest in cryptocurrencies. The other 94% are still in doubt about crypto in 2020, and approximately 55% of them will definitely not invest.