16 October, 2018
Despite recently retracting his bullish claims that Bitcoin will surpass $10,000 by year’s end, Mike Novogratz still expressed that institutions are still poised to enter the crypto industry.
Per previous NewsBTC reports from Monday, Fidelity Investments, a financial giant with over $2.5 trillion worth of client assets under management, unexpectedly divulged its plans to launch Fidelity Digital Asset Services (FDAS), a crypto-focused subsidiary. As its name implies, this startup’s operations will be largely focused on the fledgling cryptocurrency industry, with Fidelity claiming that it will offer asset custody, trading execution, and “dedicated client service.”
On FDAS’s official launch, the aforementioned products will only be available to Fidelity’s institutional clients. But make no mistake, the Boston-based company has amassed over 13,000 institutional clients in its 72-year history, indicating that this foray into the crypto market will likely be met with success.
Following this positive development, Mike Novogratz, the CEO of Galaxy Digital, took some time to lend his expertise to Bloomberg viewers, conveying his opinion on FDAS and the crypto ecosystem as a whole.
Michael Novogratz, Galaxy Digital founder and chief executive officer, discusses the evolving landscape for cryptocurrencies with Bloomberg's Erik Schatzker on "Bloomberg Markets: The Close."...
Immediately drawing attention to FDAS’s proposed custody solution, Novogratz explained that this service will likely catalyze an influx of interest from institutions. The CEO explained:
“One of the things that will get institutional investors involved in crypto is custody solutions… And Fidelity is coming out with a world-class custody solution that is aimed at institutions, so that’s a box that gets checked and [that is] something that gets taken [an institution’s] list.”
Novogratz, who was a formidable force on Wall Street in the past, also added that the proposed custody solutions from ICE-backed Bakkt and Goldman Sachs, along with the already-established service from BitGo, may lead a majority of investment consultants to finally classify crypto assets as a safe investment.
Interestingly enough, Novogratz’s comment regarding custody seems to be a direct reference to his recent appearance on CNBC Fast Money, where he claimed that “institutional FOMO” will be sparked by the introduction of crypto-friendly infrastructures, such as proper regulated custody.
But, as explained by the cryptocurrency advocate, institutions may be already feeling a growing sense of “FOMO,” as Yale, along with Harvard, Stanford, and North Carolina University, have begun to allocate capital into crypto-related ventures.
But… Institutional Adoption May Take A While
Although the arrival of Bakkt, ErisX, and FDAS, is obviously going to better this industry in the long-run, Novogratz pointed out that the arrival of institutions en-masse may not happen overnight. You know what they say — “Rome wasn’t built in a day.” Elaborating on this point, which was cautiously optimistic, the crypto fund manager stated:
“Fidelity announced their business today and it’ll probably be up and running in January, or Q1 [of 2019]. And then you have to run some water through the pipes, so my guess is you will start seeing institutional flows into pure crypto assets in late first quarter or early second quarter.”`
The Bloomberg host, who wasn’t afraid to bring up a controversial topic, went on to query Novogratz on why he retracted his claims that institutions would be all-in on crypto by now. Slightly side-stepping this question, the Galaxy Digital executive pointed out that contrary to popular belief, “everything takes a bit longer than you hope it will,” even in the emerging market that is crypto.
Likening the cryptocurrency and blockchain system to a fourth-grader, Novogratz added that it is irrational for pundits to expect for the industry to “graduate high school tomorrow and get its Ph.D. the next day.” Although the investor used some creative license to convey his thoughts, the point he is trying to make shouldn’t be underestimated. Because whether you like it or not, there are still a variety of hurdles that the cryptosphere will need to bound over before truly establishing itself as a world-changing industry.
Closing off his segment, he double downed on his forecast that Bitcoin is unlikely to surpass $10,000 by this year, adding that crypto assets will only post new all-time highs when institutions, along with a mass of retail investors finally take the plunge.
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