February 12, 2019
“The belief is this gives them great exposure to what we believe are some of the best risk-mitigated opportunities in a nascent industry. You can take a small amount of capital, you can put it in a nascent industry, you can manage your risk correctly but also get exposure to true innovation.”
Since late 2018, some of the largest financial institutions in the U.S. market in the likes of Fidelity, ICE, and Nasdaq have continued to strengthen the infrastructure supporting cryptocurrencies as an asset class.
The active involvement of widely recognized institutions in the crypto space could have fueled the confidence of other institutional investors in the traditional financial sector.
Could it Lead to an Influx of Institutions?
In mid-2018, Mike Novogratz, a billionaire investor and a former Goldman Sachs partner, said that once several institutional investors are committed to the cryptocurrency sector, more institutions will FOMO (fear of missing out) into the market.
“It won’t go there ($20 trillion) right away. What is going to happen is, one of these intrepid pension funds, somebody who is a market leader, is going to say, you know what? We’ve got custody, Goldman Sachs is involved, Bloomberg has an index I can track my performance against, and they’re going to buy. And all of the sudden, the second guy buys. The same FOMO that you saw in retail [will be demonstrated by institutional investors],” Novogratz said.
In the long run, the newly established cryptocurrency fund of Morgan Creek could set the foundation that may support the next wave of institutional investors in the cryptocurrency market.
The deal comes 14 months in the worst bear market in the 10-year history of the cryptocurrency market, which has proved that institutions are not focused on the price of digital assets but rather on the state of infrastructure that can handle an inflow of large capital into the market.