With bitcoin still on its knees and nearly all of the top cryptocurrencies failing to return to anywhere near the peak performance that they enjoyed in December 2017. Many analysts have proffered that only a major event like a bitcoin ETF or the entry of institutional money can restore confidence to the sector, even as the market totters uneasily with some investors cashing out in panic.
And so, the over the last few months, stakeholders in the crypto space have obsessed non-stop about the implications of the SEC’s approval of a bitcoin ETF, all the while overlooking another development of potentially more significant importance; the Bakkt project.
Intercontinental Exchange (ICE), the conglomerate which owns the NYSE and 23 other exchanges around the world recently launched Bakkt, a cryptocurrency platform, which when fully operational will allow consumers and more crucially, institutions to buy, sell, store and spend digital assets securely and efficiently.
According to Wall Street veteran and leading cryptocurrency analyst Teeka Tiwari, Bakkt will rewrite everything about the crypto market by creating a fully confined trading platform for institutions, allowing bitcoin futures to trade, while physically settling in bitcoin.
Tiwari explained that portfolio investors like pension funds which use the NYSE to get equity exposure would now be willing to get some exposure into cryptocurrency through an ICE owned platform like Bakkt.
“Institutional money will not allocate capital to an unregulated exchange or even a brand-new exchange, even if it’s regulated. They just won’t do it.
“But if you’re asking institutions to allocate capital to the crypto market through an exchange provider that they’ve been using for 20, 30, 40 years… of course they’re going to do that.
Tiwari described Bakkt which along the way will be partnering with other heavyweights like Microsoft and Starbucks as the first institutionally trusted crypto exchange on the market. ICE – which is worth more than $85 billion and boasts of an annual revenue of $6 billion – will provide all the things that institutions need in order to feel comfortable about investing into a new asset class by standing in the middle to guarantee the trades.
Furthermore, as the traditional asset classes (stocks and bonds) continue to underperform, all the data points to the fact that cryptocurrencies are the next big frontier in alternative asset class for portfolio investors such as pension funds if they are going afford to actually pay out the payments that they’re obligated to make.
In his closing remarks, Tiwari points out something interesting; he says the fact that the market does not seem to have fully grasped fundamental importance of the Bakkt project was an opportunity for investors who have retained sizeable crypto assets despite the market turbulence to profit immensely from the coming wave of institutional interest.