The Crypto Market is Attracting Investment Banks

Cryptocurrency prices have been trading under pressure as the volume that traders experienced at the end of 2017 has evaporated.  The surge in Bitcoin, Litecoin, Ripple and Ethereum allowed volume to surge, but the consolidation and decline during the past 4-months has taken the volume out of the market. With the 17th million bitcoin likely to be mined in soon, the most liquid crypto currency could face a supply shortage which could in turn buoy prices.  That’s because as per bitcoin’s current rules, only 21 million bitcoins can ever be created.

Bitcoin’s programing code only allows a specific number of new bitcoins to be introduced.  The timing of the 17th million bitcoins cannot be accurately predicted but can be estimated.  For each new bitcoin block there are 12.5 new bitcoin produced. Since bitcoin blocks are produced every 10-minutes, approximately 1,800 bitcoins are generated per day.

Ripple Continues to Add Partners

Ripple continues to add money transfer partners as the cryptocurrency coin is the leader in this space. While the popularity of the coin continues to grow, prices are still down more than 66% since hitting a high in December of 2017.

Reports show that 5-new money transfer operators will announced partnerships with Ripple, which will include the integration of Ripple’s xVia into their already established money transfer systems. These money transfer companies include FairFX, RationalFX, Exchange4Free, UniPAY and MoneyMatch. The partnerships will see each company trial the use of xVIA and the Ripple network with the aim to speed up the processing speed of transfers.

Investment Bankers Are Taking the Plunge into Cryptocurrencies

A Thomson Reuters survey shows that 20% of the investment banks that participated plan to begin cryptocurrency trading in the next 3-12 months. The survey included more than 400-clients. More than 70% of those who said they were planning to trade cryptocurrencies like bitcoin, said they were planning to enter the market within 3-6 months.

Goldman Sachs has already jumped in hiring a head of digital asset trading. Goldman Sachs has always been on the forefront of trading currencies and commodities. They enter the commodity market with a purchase of J Aron and company which at the time was the largest and most revered oil and commodity trading shop on the street.

Volume on the most liquid cryptocurrencies bitcoin has declined substantially since its peak in December 2017. The surge in volume is what initially spurred the interest of investment banks. While the surge in prices and the subsequent fall off shows that there can be volatility, which is attractive to investment banks, the decline in volume throughout 2018 has been disappointing.  Investment banks make money when prices are volatile and there is enough volume to generate a market making operation. Net volume was more than double, although the recent increase in prices during the latter half of April has come in tandem with an up tick in volume.  The chart of bitcoin shows that volume has been higher than current levels at least 4-times since 2015.