Crypto Update: The ebb and flow of institutionalisation

Cryptocurrencies 5 minutes to read

Jacob Pouncey

Cryptocurrency analyst, Saxo Bank

Summary:  Cryptocurrency prices are in free-fall with miners and hedge funds starting to exit the space.


This week the entire crypto market cap fell by 27% to around $150 billion. Additionally, Ethereum fell 32% after breaking the $200 support level, and Bitcoin fell in line with the market with a decline of 28%. Over the past week Bitcoin experienced its largest difficulty drop in history. This means that miners who secure the network are leaving the network, which is mainly driven by the decrease in profitability of mining bitcoins. This difficulty is often viewed as an indicator of the health of the network.

New crypto tracker delayed

This week the SIX Swiss Exchange is set to launch the first ever exchange traded product (ETP) that tracks a basket of cryptocurrencies. The Amun Crypto ETP would track the top five most liquid cryptocurrencies weighted by market cap. The basket is comprised of 50% Bitcoin with the rest being divided among XRP, Ethereum, Bitcoin Cash and Litecoin, respectively. In fact, trading was supposed to start November 22, but sources say that one of the clearing parties backed out at the last minute. Trading of the product should begin before the end of the week.

Bakkt confirms launch date

In a blog post Bakkt, the much-anticipated cryptocurrency futures exchange, announced that it will push back its original launch date of December 12. The new launch date is set for January 24. The cryptocurrency market is hoping that the launch of physically settled daily futures will lift demand for the liquid supply of bitcoins. This demand could potentially provide support to the falling cryptocurrency prices. The delay of the launch of the futures certainly did not help to support the price of Bitcoin.

Hedge funds may start to close shop

Morgan Creek Digital founder Anthony Pompliano stated that he believes many crypto-focused hedge funds will choose to shut down their funds. Many have a high-water mark from last year’s performance that they must surpass to receive performance fees. Pompliano states that many will decide to close their funds and return capital to investors. He also mentions that ICOs, which are recently under-pressure from regulators, will be required to refund investors. The unwinding of cryptocurrency positions from ICOs and hedge funds to pay back investors could provide selling pressure to the market over the coming months.
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