Nick’s Note: While the mainstream media is panicking about volatility in the cryptocurrency market, it’s missing out on one of the biggest trends in finance. My colleague Greg Wilson has the scoop below. You won’t read about this anywhere else…
By Greg Wilson, analyst, Palm Beach Confidential
In early May, Malta-based crypto start-up Hold announced that it had hired Priyanka Lilaramani as its new CEO.
You probably haven’t heard of Hold or Lilaramani. But the move was significant… Lilaramani was a director at Goldman Sachs in London for over a decade.
It also highlights a new trend that we’re seeing in the cryptocurrency space: Executives from traditional companies (like Goldman Sachs) are flocking to blockchain and cryptocurrency projects.
This is a trend that’s easy to miss if you’re not watching the space closely. And the mainstream media certainly isn’t talking about it.
It’s analogous to the internet in 1994 and 1995. During that time, the internet went from being a curiosity to receiving serious institutional investment. This trend will be even bigger with cryptocurrency.
That’s because we’re seeing not only financial capital come into the crypto space, but human capital, too.
As Michael Sonnenshein, managing director at Grayscale Investments, said at Consensus 2018 (a major crypto conference in New York that I attended last week): “It’s getting easier to attract traditional finance talent.”
The smart money is making the jump to crypto because it sees a huge opportunity. It’s a trend you need to jump on, too.
Headed for Greener Pastures
Lilaramani isn’t the only executive from a top Wall Street firm headed to the crypto space. Consider some other recent examples:
In March, Coinbase hired Eric Scro as vice president of finance. He came over from the New York Stock Exchange (NYSE), where he spent over eight years as head of finance. Scro helped expand institutional business for the NYSE and will do the same for Coinbase.
A month later, Coinbase hired Alesia Haas as chief financial officer (CFO). She was CFO at Och-Ziff Capital Management. The firm has an estimated $32.7 billion in assets under management.
Blockchain, the popular wallet provider, recently hired Peter Wilson as its vice president of engineering. Wilson is a veteran of Facebook and Google.
Blockchain also hired Breanne Madigan, a 13-year veteran of Goldman Sachs. At Goldman, she was head of the institutional wealth services team and its $1.5 trillion in assets under management.
And it’s not just executives jumping ship to new companies.
In May, three members of BlackRock’s institutional client team left to launch their own cryptocurrency fund.
BlackRock is the world’s largest asset manager, with $6.3 trillion in assets under management. According to one team member, “BlackRock is a great place, but the opportunity is just too big to miss.”
That aptly describes why these executives are leaving. It’s more than just a pay bump and a new title. It’s a once-in-a-lifetime opportunity.
Buying a Ticket to the Party
Traditional companies aren’t sitting still, either. Some are trying to buy their way into the industry.
We saw that in February 2018, when Goldman Sachs-backed Circle bought the Poloniex crypto exchange for $400 million.
Morgan Creek Capital took the same approach. The $1 billion hedge fund acquired Full Tilt Capital to get into the crypto space. Full Tilt Capital is a venture capital company dedicated to investing entirely in blockchain.
Another strategy is to incorporate blockchain and cryptocurrency into the existing business.
For example, Goldman Sachs announced earlier this month that it would open a bitcoin trading operation.
The news was a shock to many, as regulated financial institutions have avoided cryptocurrency trading so far.
But for Goldman, there was simply too much interest from hedge funds, endowments, and foundations.
Not to be outdone, rumors are swirling that Morgan Stanley is planning to add cryptocurrencies to its trading desk as well.
This is a trend we expect to continue. The opportunity is simply too big.
Just how big? Dan Morehead, CEO of crypto hedge fund and investment firm Pantera Capital, recently stated that the cryptocurrency industry could easily go to $4 trillion. And $40 trillion is definitely possible over the next decade.
$40 trillion is 100 times from where we are today.
Now’s the Time to Get In
Over the course of 2018, we’ve seen the cryptocurrency market take a breather. After reaching $20,000 this past January, bitcoin has lost as much as 70%. And the overall crypto market has mirrored that performance.
But this shouldn’t be unexpected. We’ve always said that the cryptocurrency market will be very volatile. And we need to use that volatility to our advantage.
Behind the scenes, traditional finance continues to pour more money into cryptocurrency. And as I’ve shown you, movers and shakers from Wall Street are migrating to cryptocurrency as well.
It’s a signal to us that the opportunity in cryptocurrency is far from over. Big gains are ahead for those that act now.
We could see bitcoin top $40,000 this year alone.
Use the current breather in the cryptocurrency market to buy this dip.
Analyst, Palm Beach Confidential
P.S. If you’re still on the fence about cryptocurrencies, then you should consider taking Teeka Tiwari’s Crypto Master Course. It will show you the ABCs of cryptocurrencies and their underlying blockchain technology. You can learn how to register right here. (If you’re a Palm Beach Letter subscriber, you can start taking lessons right here.)
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