Brian Armstrong, Co-founder and CEO of Coinbase, recently spoke about the need for institutional investors in the cryptoverse and why institutional investors matter a great extent to Coinbase, during Blockchain Week in New York City.
Armstrong revealed that initially, Coinbase was launched as a retail brokerage platform. However, the firm soon realized that for the cryptocurrency industry to mature and grow, institutional investors had to start investing their money in the cryptocurrency market, he added. The CEO further said that around 90 percent of the money around the world was linked to institutions, adding that “it’s not just retail.”
With an intention to start providing services to institutional investors, Coinbase reached out to a few potential customers in order to learn their benchmarks. Through this, the firm collected data of the different requirements, which included being a qualified custodian.
“[…] So for instance, Coinbase Custody is a New York trust Charter; they needed a qualified custodian a place to store these crypto assets before they could keep their money there. That’s the kind of thing that didn’t really exist in crypto at that time and so like many things that […]”
Following this, Coinbase started to build a more trusted infrastructure in order to draw more institutional money, which eventually resulted in these investors becoming an integral part of the firm’s business. He went on to state,
[…] we’ve started to enable features like OTC trading through coinbase custody where these large block trades are starting to happen. And institutions have become, I think, 60% of our trading volume on Coinbase Pro as well. So, these are a really key customer segments for us and I think we’re just gonna keep investing more and more in it […]”
This was followed by Armstrong being asked about the interaction between custody, OTC and Coinbase Pro customers. On this subject, he stated that the market structure of crypto was “evolving”, where it was “beneficial” to separate OTC, Custody, and Pro, similar to the traditional financial system. Armstrong added that having trusted custodians was “really important,” considering all the security breaches and scams taking place in the market.
“[…] the exchanges and the brokerages these are all, what we’re seeing is really the foundational pieces of this next generation financial system come together and that’s really what I think crypto […] gonna be this really new financial system that has all these kind of benefits some of the things will have counterparts to what it was in finance 1.0 […]
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Bitcoin’s on-chain/off-chain valuation indicators the key point of focus as coin heads to $13,000
With the rise in Bitcoin’s price, the rest of the cryptocurrency market has followed suit by displaying a green trend across the board. In a recent series of tweets by popular cryptocurrency analyst Adam Tache, users were informed about the top Bitcoin on-chain and off-chain valuation indicators, derived from on-chain valuation models.
The analysis touched on the Mayer Multiple created by dividing the price by the all-important – 200 day moving average. The current average Mayer Multiple stands at a figure of 1.39, which may climb higher. Looking at previous figures, the normal Mayer Multiple figures stated that if the value shoots up to 2.4, then Bitcoin eventually retraces back to a comfortable 1.5. The Mayer Multiple is usually considered as the original indicator used to clock the valuation of Bitcoin.
Another major indicator discussed in the thread was the NVT Ratio invented by Willy Woo, Partner at Adaptive Fund. The indicator is used to calculate Bitcoin’s prominence or value in the cryptocurrency space by evaluating the amount transacted on the blockchain as a “proxy for investment flow and bear and bull market cycles.”
At the moment, the NVT ratio for Bitcoin is in an abnormal region compared to the start of previous bullish patterns. The NVT ratio was above the “bear market” separator, which meant that the cryptocurrency was overbought. When Bitcoin is overbought, it usually means that the buying pressure is much higher than the selling pressure. Adam Tache opined,
“NVT signaling overbought is likely due to a number of factors — namely the proliferation of exchange-based, purely off-chain txs driving short-term price action.”
The analysis also pointed out the liveliness of the Bitcoin indicator created by Tamas Blummer. The indicator showed the inverse count of lost or ‘HODLed’ Bitcoin, while stating that when the ratio increases, long-terms holders of the cryptocurrency decrease their positions. The indicator conveyed accumulation of Bitcoin when the ratio decreased.
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