Hedge Fund CIO Says Wall Street Is In a Chicken Race With Cryptocurrency Adoption

Hedge Fund CIO Says Wall Street Is In a Chicken Race With Cryptocurrency Adoption

One of the cryptocurrency investment firm BlockTower Capital’s co-founders, Ari Paul, recently embarked on a lengthy tweetstorm. The overarching subject? Wall Street actors’ potential adoption of cryptocurrencies.

Wall Street actors hold a wait-and-see attitude

Specifically, Paul discussed the main barriers to institutional adoption of cryptocurrencies. He argued that the current bear market has prompted Wall Street to adopt a “wait-and-see” stance towards the burgeoning asset class – akin to that of a chicken race.

Moreover, Paul suggested that financial institutions have three main viewpoints when it comes to cryptocurrency. First and foremost, he noted that there is a marked “venture capital mindset” which is mostly concerned with whether institutional investments can capture additional value creation through early-stage adoption, as opposed to later-stage investments.

Then Paul also highlighted that there is a “passive Bitcoin or index exposure” which relates to institutional investors view on whether Bitcoin is going to become “digital gold” or if investments should primarily be used as a portfolio hedge.

Furthermore, Paul also proposes that there is uncertainty over whether the cryptocurrency market is an arena where investors believe that they can generate profits as service providers, or mainly through active banking.

In addition to these main three philosophical question marks, Paul also said that many institutional investors are in “wait-and-see mode” due to regulatory uncertainties and the current negative market sentiment.

Institutional adoption could happen Q3 2019

Moreover, all of this ties neatly into the views held by Dan Morehead, CEO of Pantera Capital. According to Morehead, institutional investors will eventually enter the cryptocurrency market -however, he has also noted that this will likely not happen before the cryptocurrency price has recovered.

Ari Paul’s proposition is, however, not that institutional adoption solely hinges on a recovery in the price of Bitcoin. Rather, Paul has suggested that regulatory acceptance of Bitcoin is just as vital – seeing as current regulations are somewhat unclear.

“I’ve been too optimistic about the pace of institutional adoption in the past. It’s coming, but I can’t estimate which quarter (Whether that’s this year or 2022) that we’ll see a big spike. As a humble guess, something like q3 2019,” Paul tweeted.

As always, it remains to be seen whether Paul’s prediction that institutional adoption occurs around the third quarter this year or not. Be that as it may, it does seem that Paul’s other views tie into what a myriad of cryptocurrency observers have been saying lately.

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