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Valkyrie Interview: Institutional Investors and Crypto Prices

Bloomberg BNN | Vildana Hajric and Michael P. Regan | Nov 5, 2022

Institutions and crypto - Valkyrie Interview:  Institutional Investors and Crypto PricesSo if more big players are entering the space, why do the prices of Bitcoin, Ether and other tokens remain so depressed compared with last year’s peaks?  Leah Wald, chief executive officer of digital-asset investment firm Valkyrie Investments Inc., joined the “What Goes Up” podcast to share her thoughts on that topic

Q: A Fidelity survey shows adoption among institutional investors increased to 42% in the US, 67% in Europe. Globally 81% of all institutional investors believe digital assets should be part of a portfolio. Did institutional involvement cushion the blow from this year’s selloff?

  • A: It absolutely depends on your time horizon. And institutions have a longer time horizon. They also, as a fiduciary, cannot just jump in with a strategy. My former partner used to tell me, ‘Hope is not a good investment strategy.’ So as much as we may like Bitcoin and we’re interested in Bitcoin, if it’s a bear market, it’s a bear market we’re not buying.

See:  Canadian Government Begins Crypto Consultations with Digital Asset Stakeholders

  • So I do think I’m very excited about institutions’ interest, family offices as well, across the spectrum a desire to have a crypto strategy for when the timing is right to actually buy in. We also know that there are a lot of different committees that need to sign off, and there’s a lot of other hurdles that institutions have, whether it’s risk parameters, among others, and also just generally the vehicle that they need in order to buy it.
  • Price: Those statistics from Fidelity -- and also a recent KPMG survey -- and many others have been absolutely showing very exciting bullish metrics, but it’s not showing up in the market right now. And I think that’s also because we have a coupling in correlation to the traditional market, and all of us are very concerned, for the most part, about what the macro outlook is.
    • So I don’t see any institutions investing in such a risk asset at the moment. I do see a lot, and we hear a lot, of institutions that we’re speaking to on the sidelines and preparing. So I do think if we consider a longer time horizon, that’s exciting.

Q: What’s going on that’s keeping crypto prices so muted recently? Not even the BlackRock-Coinbase partnership announcement was able to spur a big rally.

  • A: The survey that you just mentioned, [indicates] the main obstacle to adoption -- over 51% said -- was volatility. And that’s always been for the most part what registered investment advisers that we speak to -- and other money managers -- have had as their highest concern: volatility and an inability to accurately allocate given that volatility.

See: 

Opinion: Crypto and Financial Inclusion – Dispelling Narratives

Matt Levine: The Crypto Story

  • The BlackRock-Coinbase news was extremely important. You’re right that it didn’t move the markets yet, but the integration with Aladdin can’t be overstated. And I think anyone in traditional finance understands the power of Aladdin and obviously the power of BlackRock.
  • What we’ve been hearing is that allocators still want to work with sophisticated crypto active managers to manage that product rather than allocate themselves due to those concerns around volatility, lack of understanding around fundamentals, lack of regulatory clarity, and just general discomfort in their own understanding of how to allocate to this asset class. So I believe that, number one, as institutions get more comfortable with the asset class, they will likely feel more comfortable allocating themselves through that integration.

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NCFA Jan 2018 resize - Valkyrie Interview:  Institutional Investors and Crypto PricesThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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