In recent weeks, cryptocurrency prices have largely been pummeled as market bears have been in control. Meanwhile, many exchanges have long been trying to institutionalize the market in an attempt to create greater price stability. The most recent one is NYSE parent company Intercontinental Exchange, which is similarly pursuing greater security for institutional investors in the crypto space.
Investors who decided to buy XRP or another cryptocurrency such as Ethereum at year-end 2017 were forced to suffer massive slumps. The fact that leading cryptocurrency Bitcoin has stabilized of late does little to change the precarious situation.
Exchanges such as the Intercontinental Exchange as well as competitors like Coinbase are trying to accelerate the institutionalization of the crypto market. In July, the Intercontinental Exchange alongside Starbucks and Microsoft announced a new crypto exchange startup dubbed Bakkt, as they strive to create a more secure market overall.
Bitcoin could become more interesting to retail investors worldwide as well as for large institutions such as pension funds, for instance. In addition to greater security, an important issue is the ramifications of extreme volatility. This needs to be reduced but failures cannot be completely eliminated due to the system.
Coinbase developers are taking a similar tack to ICE and are also working on better products specifically targeting institutional users. Wall Street veterans are engaged with these Coinbase developments, which could strengthen the case for a bitcoin ETF. Until now, the U.S. SEC has repeatedly shot down applications for a bitcoin ETF, but this cooperation may finally lead to success.
To date, cryptocurrencies have proven to be an instrument for speculative investors. The activities of the ICE and Coinbase, however, in addition to other companies could mean that in the future more than a few hedge funds, crypto funds and large companies will enter the market.