Crypto Markets Listless as Institutional Buys Slow Novogratz

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Galaxy Digital CEO Mike Novogratz has described the broader crypto market as lazy or lacking in enthusiasm, largely due to institutional investors fleeing cryptocurrencies.

In a June 1 interview with CNBC, Novogratz said that while relatively small retail buyers add some stability to the market with their modest holdings, the lack of large-scale buyers becomes a concern.

Mike Novogratz on CNBC Market Alert Source: CNBC There is a steady supply from retail. We were seeing it across all platforms, and there just isn’t a lot of institutional excitement right now.

The claims echo a May 31 report from CoinShares head of research, James Butterfill, which details that institutional buying of digital assets resulted in outflows totaling $39 million last week, the sixth consecutive week of exits.

Novogratz, however, pointed to two important developments in Asia that could help reverse the trend.

First, he pointed out that Chinese social media app WeChat now offers Bitcoin (BTC) price quotes on its app, which he considers a milestone given its popularity. At the time of writing, WeChat has 1.3 billion monthly active users, according to data from Statista.

Wechat is available for #Bitcoin search and only Bitcoin. A small but big step from China/HK to crypto pic.twitter.com/DHq4uqnq5C

Qinwen Wang (@Qinwen_Wang) June 1, 2023

Second, Novogratz turned to Hong Kong, which has now officially started allowing retail clients to trade crypto on regulated exchanges for the first time, indicating growing adoption in Asia.

In an interview with Cointelegraph, Tommy Honan, head of product strategy at Australian crypto exchange Swyftx, agreed that the crypto market has crashed over the past month.

The level of activity of institutional investors is much more moderate. But it’s not just institutions, retail investors have been hit in the hip by cost-of-living pressures, he said.

As crypto firms struggle to cope with an increasingly precarious regulatory landscape in the United States, Honan still expects a strong price rally when the big companies decide to step back.

Related: Last BTC Price Drop Before Breakout of $30,000? Bitcoin wipes out weekend gains

Institutions will come back to the market, and when they do, they will come back hard. I don’t expect that to happen in the United States until one of two things happens, he said.

You either need established, sensible rules for crypto. Or you need the Republicans to win the US election next year. Crypto has become a wildly partisan issue almost overnight, which is exactly what the industry didn’t want or need.

Like Novogratz, Honan says Hong Kong presents a unique opportunity for the crypto market, unleashing a new wave of investors into the market and giving US-based companies a place to set up shop if needed.

China’s Central TV Station just broadcast information about Hong Kong allowing people to buy Bitcoin, Ethereum and other coins.

This is huge news! China is waking up to crypto again.

What is happening in Hong Kong is only possible with Beijing’s approval. Be ready! pic.twitter.com/Zxdi7UZNHK

Lark Davis (@TheCryptoLark) May 24, 2023

Were watching developments in Hong Kong very closely. If Hong Kong is used by mainland China as a testing ground for safe crypto adoption, it would be a significant tailwind for the market, Honan said. We were all looking West for the next bullish trigger. Maybe we should have looked east.

With Hong Kong now open for crypto-related activities, an increasing number of companies are currently scrambling to obtain a license.

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