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Today Market Trends Pulling Wall Street to Bitcoin and Cryptos

Wall Street

June 18, 2020 | 

Dan Mitchell |  0 Comments| 

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Wall Street is located in the Financial District of New York City and is colloquially used to refer to all United States-based financial institutions and markets because of the sheer scale of the United States economy on both a national and global scale. 

We explore some of the trends which influence Wall Street, as well as its relationship with cryptocurrencies such as Bitcoin.

What is Wall Street?

Wall Street is represented by institutions and ‘institutional investors’; as opposed to individuals and retail investors. Institutional investment is performed by companies or groups of companies (such as hedge funds) with a huge volume of capital, often far beyond that of individuals / ‘retail investors’.

As such: it is highly desirable for any company or project to get its stock listed on one of the Wall Street stock exchanges or even pique the interests of institutional investors, due to the volume of investment money circulating through Wall Street.

The two greatest stock exchanges (by market cap) are located in Wall Street, as well as being one of the largest and most influential financial districts: NASDAQ and the New York Stock Exchange. The former of these is home to tech giants: Microsoft and Apple, as well as several cryptocurrencies and blockchain-related stocks.

#1: Exposure, and Demand: Market performance + News

Cryptocurrency started to pique the attention of a much larger audience when it broke into the mainstream with the notorious ‘crypto boom’ in late 2017. This greater interest in blockchain and cryptocurrencies from institutional investors coincided with an increase in targeted investment vehicles, start-ups and products.

Other events which can positively affect institutional interest in cryptocurrencies are growth in token value and market cap, and news from the network: such as new technology releases. Other good news includes the launch of new investment products, such as crypto derivatives trading (futures, options, etc).

Such derivatives launches include Bakkt which launched the first Bitcoin cryptocurrency futures and options trading in the US in the first quarter of 2020 and ErisX which launched the country’s first Ethereum futures product more recently in May 2020.

#2: Learning By Example

The attention of investors, both institutional and retail, can also be attracted to existing examples of investment from reputable individuals and institutions. Crypto-related listings on stock markets like NASDAQ, for example.

Big corporations, funds, and experts “buying into” a cryptocurrency company, or large volumes of an asset, can also positively influence the actions of investors. Acting as institutional investors, these entities invest in projects and companies privately and outside of public funding rounds (where retail investors typically participate).

Investor confidence grew in the cryptocurrency markets with the entry of Telegram working towards its own cryptocurrency project, for example; and the Libra Association (led by Facebook) which initially included the likes of Visa and PayPal.

In the end, however, investor confidence was dashed when both Telegram’s TON and grams project and the Libra Association’s Libra were affected as a result of regulatory actions by organisations such as the US Securities and Exchange Commission (SEC).

The TON and grams project was cancelled outright, whilst Libra witnessed delays following a mass departure of founding members from the Libra Association.
 

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