Galaxy Digital CEO Mike Novogratz has described the broader crypto market as “lacking care” — or a lack of enthusiasm — largely due to institutional investors’ aversion to cryptocurrencies.
In an interview with CNBC on June 1, Novogratz said that while the relatively small retail buyers with their modest inventory provide some stability to the market, the lack of bulk buyers is becoming a problem.
Mike Novogratz on CNBC Market Alert Source: CNBC “There’s a constant supply coming from retail. We’re seeing it across all platforms, and there just isn’t a lot of institutional excitement right now.”
The claims echo a May 31 report by Coinshare research director James Butterfill, which detailed that institutional digital asset purchases saw outflows totaling $39 million last week, for the sixth straight week with drains.
However, Novogratz has pointed to two significant developments in Asia that could help turn things around.
He first pointed out that Chinese social media app WeChat is now offering Bitcoin (BTC) price quotes on its app, which he sees as a significant milestone given its popularity. According to data from Statista, WeChat has 1.3 billion monthly active users at the time of writing.
Second, Novogratz turned his attention to Hong Kong, which has now officially started allowing retail clients to trade cryptocurrencies on regulated exchanges for the first time, a sign of increasing adoption in Asia.
In an interview with Cointelegraph, Tommy Honan, head of product strategy at Swyftx, agreed that the crypto market has largely “fizzled” over the past month.
“Institutional investor activity is definitely more subdued. But not only institutions, but also private investors are suffering from the pressure of the cost of living,” he said.
As crypto firms grapple with the increasingly precarious regulatory landscape in the U.S., Honan still anticipates a sharp price rally to follow if large firms decide to jump back in.
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“Institutions will come back into the market and when they do, they will come back hard. I just don’t expect that to happen in the US until one of two things happens,” he said.
“Either there needs to be firm and sane rules for crypto. Or you need Republicans to win next year’s US election. Crypto has become an insanely partisan issue almost overnight, and that’s exactly what the industry neither wanted nor needed.”
Similar to Novogratz, Honan says that Hong Kong represents a unique opportunity for the crypto market, bringing a new wave of investors to the market and giving US firms a place to base themselves if the need arises.
“We are monitoring developments in Hong Kong very closely. “If Hong Kong is used by mainland China as a testing ground for safe cryptocurrency adoption, it would be a significant tailwind for the market,” Honan said. “We’ve all been looking west for the next bull trigger. Maybe we should have looked east.”
With Hong Kong now open for crypto-related businesses, more and more companies are currently struggling to secure a license.
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