Anyone who’s following developments in the fast-paced world of cryptocurrency is well aware that things are changing fast. Until a few years ago, most banks and governments saw bitcoin as (at best) a comical nuisance and (at worst) a threat to international law. In the past couple years, however, governments have either had to either adopt an uneasy truce with crypto or denounce it completely. Last year saw the value of bitcoin balloon to $20k per coin before dipping back down to $6k – bullish investors are currently looking towards a $10k coin price to split the difference and get things back on track. Crypto prices are still incredibly volatile, but at this point, it would be naïve to write blockchain technology off as a trend. For better or worse, crypto is here to stay.
On one level, this simply means that average consumers and aspiring investors can buy into crypto through a growing number of user-friendly gateway platforms like Bitbuy.ca in order to gamble on the currency’s value or to execute a simple money transfer. On a larger scale, governments, big banks and independent financial giants are getting in on the action, figuring out how this revolutionary technology might suit their agendas. In this post, we’ll focus on the latter of the three: institutional investors and merchant banks.
Less than a month ago, the famous (some might say infamous) hedge-fund manager, Michael Novogratz, took the world’s first crypto focused merchant bank public on the TSX (Toronto Stock Exchange), allowing investors to buy a diversified basket of crypto-related positions in one fell swoop. Novogratz is a charismatic rainmaker notorious for losing billions and bouncing back – hence the infamous label. While he could theoretically take short positions (betting against a company’s value) within the wide world of crypto, his enthusiasm and unfailing positivity suggests that he’ll be going long for the foreseeable future, fiercely leading the charge into the future of a market that has – hands down – the highest risk-reward ratio available.
Galaxy’s been around since 2009, but crypto markets have only caught on with financial high-rollers recently, since they crossed out of the margins into the fringes of the mainstream. Because laws and policies surrounding crypto are still so ill-defined, Novogratz encountered no small share of troubles getting his IPO off the ground, eventually resolving to take the firm north of the border and merge with an already listed shell company on the Toronto based exchange. Now that Galaxy is open to the public, casual speculators and career investors can place bets – small or large – on crypto with ease.
In and of itself it all makes for a pretty interesting story – disgraced hedge fund billionaire bets his reputation on crypto – but what’s the takeaway? What does it all mean? On one hand, it’s just another pathway that’s opened up for finance professionals to make and lose thousands and millions of dollars. In another sense, it announces that the crypto has found a firm foothold in the institutional world of finances – another piece of mounting evidence that we’re only in the prologue of the story of cryptocurrency.