Despite recent slump, digital asset market can look to growth as tech, regulation and security issues solved
By CHARLES WONG
What a difference two years makes. In 2017 US banking giant JP Morgan dismissed the sector as nothing more than a fraud. Last month, it announced it is launching its own “digital token.”
The news sent more than a tremor of anticipation across the fintech sector and after the announcement – aptly or not, made on Valentine’s Day – the prices of the core cryptocurrencies rose. Bitcoin, the original and the biggest crypto, and still very much the market bellwether, climbed by more than 10% in less than a week.
Bitcoin has, of course, slumped again. And, while it is clear that this Wall Street titan is not about to launch its “own cryptocurrency”– it’s actually a blockchain-based payment network that is private, controlled and very much owned, so everything that a “true” cryptocurrency is not – JP Morgan’s entry, in whatever guise, into this ever-developing yet still doggedly enigmatic sector cannot be ignored.
So has the much-anticipated mainstream institutional involvement finally arrived in the digital asset sector?
Oskar Fletcher, a partner at London-based investment firm All Blue Capital, thinks it has, regardless of what JP Morgan might or might not be planning.
All Blue Capital manages a portfolio of funds and companies with more than US$15 billion in combined annual revenue and describes itself as a pioneering and world-leading Blockchain investment firm and one of the largest institutional owners of cryptocurrencies.
As such, Fletcher keeps an experienced eye on the institutional side of the market and says the main factors that have so far prevented the traditional finance heavyweights from entering the sector have, largely, been fixed.
“The sector experienced extreme volatility in 2018,” Fletcher told Asia Times, “as the industry was riddled with mismanaged expectations on critical infrastructure implementation… ultimately, these combined and prohibited institutional participation.”
Crucially, however, Fletcher now says the core issues – regulation, insured and secure storage, and price volatility – are being solved and adds the institutions will have also noted how the sector’s tech backbone, the wider blockchain industry, made real progress in term of innovative in 2018.
Fletcher cites the fact that institutions such as IBM, American Express and even NASA have started to implement blockchain into their operations as a clear signal to the market that the tech is now ready for mass adoption.