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Now's the time to follow the “Smart Money” into crypto…

by , 14 July 2021
Now's the time to follow the “Smart Money” into crypto…
What's been going on with cryptos'?!

The total crypto market cap has dropped over R200 billion over the past month.

And it seems like a lot of retail investors are getting out of the crypto markets.
Bad move?

I think so!

You see, there's some positive news for crypto's behind the scenes in the institutional space.
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The “Smart money” flowing into crypto has just begun
 
In June, Global Custodian and US-based banking giant Citi published a report entitled “Is the securities services industry ready for digital assets?”.
 
The survey received responses from over 200 custodian banks, asset managers, insurance companies, broker/dealers and providers of financial markets infrastructure.
 
Global Custodian focuses on what really matters for banks and other large financial services companies that do business with other banks: for corporate planners at these organisations, it is an important publication. 
 
The scope of the research included the crypto world:
 
“In this paper, we take digital assets to mean essentially a basket of different asset classes enabled by a common technology, cryptographically secured on distributed ledger technology(DLT). These assets can include cryptocurrencies, stable coins (cryptocurrencies pegged to fiat money or other assets), central bank digital currencies, security- and asset-backed tokens and NFTs (non-fungible tokens), representing anything from music to art and other collectibles. In addition, other relatively illiquid assets, such as private equity and real estate, have the potential to be digitalised and fractionalised.”
 
A key finding of the research was that 91% of respondents expect that digital assets will become mainstream – or dominant – over time.
 
“Some 63% of survey participants indicated they were in the process of developing a strategy to invest in or support digital assets, while 28% said they already have a clear strategy in this regard.”
 
Furthermore,
 
“Almost 50% of survey respondents expect investor interest in digital assets and related services to grow rapidly.” 
 
So what can we take away from this?
 
Well, for all the excitement about the crypto world, institutional investors haven’t been involved as much as we think.
 
That’s because, regulated organisations, providers of infrastructure, market makers and banks which support conventional markets have yet to appear in the crypto world.
 
Of maybe because crypto is still fairly new to the “mainstream”. And they could be waiting for approval of a crypto ETF, which would be a huge deal for the crypto markets.
 
Whatever, the reason may be, the Global Custodian/ Citi report suggests institutional interest could change fairly soon.
 
When Global Custodian’s constituency does become involved, you can bet a huge amount of liquidity will flow into the crypto world.
 
For now though, the institutional investors that are already investing in cryptos are moving away from Bitcoin.
 
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Bitcoin’s out…Alt coins are in!
 
According to a June report from CoinShares, Bitcoin is the only crypto it tracks that has seen a monthly outflow. It has a $246 million outflow in the month of June.
 
 
And if you look at the other cryptos like Ethereum, Ripple, Polkadot, and Cardano and add those up, it’s going to equate to about $35 million in inflows. 
 
As you can see, institutions are taking this opportunity to add exposure to other cryptos, and they’re taking advantage of the lower prices when some retail investors may expect lower prices in the future. 
 
In my view, the best way to play crypto right now is to follow the smart money. And that means, you need to ignore Bitcoin and pounce on the smaller, alternative cryptos with massive profit potential!
  
See you next week.
 
Joshua Benton,
Managing Editor, The South African Investor


Now's the time to follow the “Smart Money” into crypto…
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