Financial Adviser Says Institutional Investors Should Consider Cryptocurrencies

The suggestion was made via a research note that the firm published on Monday. While still cautionary, the advice was bullish and suggested that blockchain technology may disrupt the digital world, stating:

Despite the challenges, we believe that it is worthwhile for investors to begin exploring this area today with an eye toward the long term. Though these investments entail a high degree of risk, some may very well upend the digital world.

The news comes on the heels of the announcement that Morgan Creek Digital has started a cryptocurrency venture capitalism (VC) fund backed largely by pension funds. Founder Anthony Pompliano suggested that this is the first-ever institutional pension investment in cryptocurrencies.

Why the fuss?

The news of these relatively-small institutional movements has been encouraging for cryptocurrency investors. An increase in institutional money in the cryptocurrency marketplace would certainly drive prices in a positive direction — particularly with Bitcoin (BTC). Because the total number of bitcoins is fixed, an increased investment would produce an exponential growth in valuation. Such a move toward institutional money is also seen as a dramatic turn toward mass adoption. The street credibility of digital currencies was tarnished early on by a number of factors. Not only was Bitcoin considered a dark web favorite, but the dramatic decline in price throughout 2018 left many investors nervous. However, that image is changing. According to the Cambridge Associates report:

The dramatic declines that swept across the crypto space raised questions about the future of these assets and the blockchain technology that underpins them. Yet, in looking across the investment landscape, we see an industry that is developing, not faltering.

Bottoms up?

The news also seems to lend credence to the suggestion that Bitcoin has hit a relative bottom. The substantial increase in prices at the beginning of the week and the suggestion by some experts that Bitcoin is prepared to recover both seem positive. Nevertheless, the market jump seems to have stalled out, with the price of Bitcoin stabilizing just under $4,000. A similar pop occurred early in January but led to another decline. With the market responding to positive news, it is certainly helpful to see the coin continue to maintain support at the $3,500 level — even during decline cycles. In spite of the positive news, no one can be certain whether 2019 will bring a substantial bull run or a flat year of support gathering. However, one thing is certain — cryptocurrencies are here to stay. Think pension and endowment investment will drive the price of Bitcoin (BTC) up in 2019? Or will institutional investment take time to materialize? Let us know in the comments below!