[Gold Age 21] "Coin Market Shifted from Individual to Institutional Leadership, Different from 2017"

"Bitcoin ETF Launch to Become a Market Turning Point"

Handaehoon, a researcher at SK Securities, attended the "2021 Gold Age Forum: Smart Retirement Planning for Silver Investors" hosted by Asia Economy on the 8th at the Bank Federation Building in Jung-gu, Seoul, and gave a presentation on the topic "The Era of Institutional Investors." The forum was conducted via non-face-to-face online live streaming to prevent the spread of COVID-19. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Minwoo Lee] An analysis suggests that the virtual asset market, represented by major cryptocurrencies Bitcoin and Ethereum, is fundamentally different from the past. Unlike before, when growth was centered on individuals, institutional investors are now leading the market, establishing an ecosystem as financial assets.

On the 8th, at the ‘2021 Asia Economy Gold Age Forum’ held at the International Conference Hall of the Bankers’ Association in Jung-gu, Seoul, Handaehoon, a researcher at SK Securities, said, "The reason Bitcoin prices have risen this year is due to growing expectations that the market will shift to being institutionally driven, as companies like PayPal and Tesla have introduced Bitcoin payments or directly hold Bitcoin." He added, "Furthermore, with large tech companies and financial firms entering the market, there are prospects for it to settle within the regulatory framework." According to Upbit, a domestic cryptocurrency exchange, as of 12:17 PM that day, Bitcoin was priced at 39.27 million KRW, down 1.19% from the previous day. Although this is less than half of the all-time high of 81.99 million KRW recorded on April 14, it is four times higher than the previous peak of 11.21 million KRW on July 8 last year.

The entry of institutional investors is also evident in the numbers. A representative example is the reduction in the amount of Bitcoin held by cryptocurrency exchanges. The researcher explained, "Individuals trade Bitcoin on cryptocurrency exchanges, but institutional investors trade over-the-counter and store their assets in their own cryptocurrency wallets." He analyzed, "Therefore, the decrease in Bitcoin holdings by cryptocurrency exchanges can be interpreted as institutions, not individuals, buying Bitcoin. In fact, publicly listed companies such as MicroStrategy, Tesla, and Coinbase continue to purchase Bitcoin."

He also predicted that this trend will expand further as custody services that store cryptocurrencies like Bitcoin for institutional investors increase. The researcher said, "Companies like Coinbase, which went public this year, are no longer centered on individuals but have transformed into institution-focused companies." He explained, "In the past, individuals made up a large portion, but now about 70% are institutions, and they provide solutions targeting institutions."

This change in attitude among financial institutions is cited as the biggest difference from the 'coin frenzy' period in 2017. The researcher emphasized, "While the head of JP Morgan once claimed Bitcoin was a scam, the company is now working on custody service contracts. Fidelity, which was proactive even then, is now operating custody services. Goldman Sachs is offering customized products, and BlackRock, the world's largest asset manager, has classified Bitcoin as an investable asset." Additionally, American IT giants such as Microsoft (MS), Tesla, and Facebook are entering the cryptocurrency market. Domestically, companies like Naver and Kakao have participated in the Central Bank Digital Currency (CBDC) project promoted by the Bank of Korea.

The researcher predicted that the launch of Bitcoin Exchange-Traded Funds (ETFs) will be a major turning point. Considering that gold investment demand surged and prices rose significantly after gold ETFs were introduced, Bitcoin ETFs are expected to be officially recognized as investment assets, securing Bitcoin’s status as 'digital gold.' In the United States, asset management firms such as Fidelity and ARK Investment have already applied to the Securities and Exchange Commission (SEC) for Bitcoin ETFs.

The researcher advised, "Many still believe this will end as a mirage like in 2017, but unlike then, when growth was driven solely by expectations, companies are now participating, expanding the ecosystem and establishing it as an asset. In this situation, rather than blindly investing in unknown cryptocurrencies, it is necessary to pay attention to Bitcoin or Ethereum, which are considered safe assets among cryptocurrencies."

This content was produced with the assistance of AI translation services.