Crypto Market Lacks Enthusiasm

Mike Novogratz, the chief executive officer of Galaxy Digital, has described the broader cryptocurrency market as “lackadaisical” or unenthusiastic, primarily due to the reluctance of institutional investors to invest in cryptocurrencies.

In an interview with CNBC on June 1, Novogratz stated that while the modest holdings of relatively small retail buyers add some stability to the market, the lack of large-scale buyers is becoming a cause for concern.

“There’s a constant bid from retail. We’re seeing it through all the platforms, and there’s just not a lot of institutional excitement right now.”

The claims echo a report published on May 31 by James Butterfill, the head of research at CoinShares, which detailed that institutional buying of digital assets experienced outflows totaling $39 million as of the previous week, the sixth consecutive week of outflows.

However, Novogratz has identified two significant developments in Asia that may help turn the tide.

First, he mentioned that the popular Chinese social media app WeChat now provides Bitcoin price quotes on its app, which he considers a significant milestone.

According to data from Statista, WeChat has 1,3 billion monthly active users as of this writing.

Second, Novogratz looked to Hong Kong, which has now allowed retail customers to trade cryptocurrencies on regulated exchanges for the first time, a sign of growing Asian adoption.

Tommy Honan, the head of product strategy at the Australian cryptocurrency exchange Swyftx, concurred in an interview that the cryptocurrency market has “fizzed out” significantly over the past month.

“The activity levels of institutional investors are unquestionably more subdued. Cost-of-living pressures have not only affected institutions but also individual investors,” he said.

Even though crypto firms are scrambling to adapt to an increasingly unstable regulatory environment in the United States, Honan anticipates a strong price recovery when large firms decide to re-enter the market.

“Institutions will return to the market, and when they do, they will return strongly. “I just don’t anticipate that happening in the United States until one of two things occurs,” he said.

“You must either have established and reasonable rules for crypto. Or you need the Republicans to win the U.S. elections the following year. Crypto has become a wildly partisan issue almost overnight, precisely what the industry did not want or need.”

Like Novogratz, Honan believes that Hong Kong presents a unique opportunity for the cryptocurrency market by attracting a new wave of investors and providing a location for U.S.-based companies to set up shop if necessary.

“We are closely monitoring developments in Hong Kong. If mainland China uses Hong Kong as a testing ground for the safe adoption of cryptocurrencies, it would be a significant tailwind for the market, according to Honan.

“Everyone has been searching the West for the next bull trigger. Perhaps we should have looked east.”

With Hong Kong now permitting crypto-related business, many companies are vying for licenses.