Has the 2020 global lockdown piqued investor’s interest in trading cryptocurrencies or digital currencies like Bitcoin? Industry experts in the cryptocurrency trading market certainly believe so. Since the beginning of the lockdown, the volume of crypto trading across the world and in India is growing. By December 2020, the average daily trading in Bitcoin was worth around $60 to $65 million.
This is a global phenomenon and the global market size for cryptocurrency trading is expected to grow from $1.6 billion in 2021 to nearly $2.2 billion by the year 2026. According to Facts & Factors, the cryptocurrency market is projected to grow at a CAGR of 30% between 2019 to 2026.
The growing number of cryptocurrency exchanges and investors around the world is a testament to this trend. Sumit Gupta of CoinDCX talks about how they have enabled “the availability of educational material to cryptocurrency traders for free.”
Is the current interest in digital currency trading just a "fad" or is it here to stay for good? Let us delve deeper.
Among the leading cryptocurrencies, Bitcoin has touched price levels in 2021 that were never seen before. Since crossing the $20,000 mark in December 2020, Bitcoin hit a high of $40,000 in January 2021 and $50,000 in February 2021. The subsequent months saw a spectacular crash, triggered by tweets from market makers like Elon Musk. Despite its volatile performance, the Bitcoin boom is attracting more retail investors looking to diversify their portfolios.
Among the leading cryptocurrency exchanges in the country, WazirX witnessed a 125% increase in trader sign-ups on its platform, while CoinDCX has seen an 85% growth in traders in recent quarters. Most of the retail investors putting their capital into digital currencies are in the younger 25-to-40 age bracket.
Vincent Poon of the Santander Asset Management company estimates that “Bitcoin price could rise as high as $100,000” and the “fear of missing this price point” could encourage more retail investors to invest in this currency now.
It is not just cryptocurrency exchanges that are observing this trend. Public-listed companies like Square and MicroStrategy are also investing part of their capital into Bitcoin, as observed by Raghu Mohan of Lumos Labs.
In the near future, it is unlikely that cryptocurrencies will become an alternative to fiat currencies but there is no doubt of the immense potential as a digital asset for mainstream investors.
For a long time, digital or cryptocurrencies with all their volatility and complexity were considered strictly “don’t touch” for investors including some fund managers. However, there is now a growing recognition of crypto assets among many wealth managers around the globe.
An example of this is that of the investment company, Goldman Sachs which is enabling its clients to invest in Bitcoin and other cryptocurrencies. A Greenwich Associates survey found that over 70% of institutional investors believe that cryptocurrencies are unlikely to go away.
Apart from Goldman Sachs, the Morgan Stanley investment company is also offering cryptocurrencies as an asset to its clients. Launched in April 2021, the Morgan Stanley Bitcoin Fund raised nearly $30 million in just its first 14 days.
Cryptocurrency advocate, Mike Novogratz is also partnering with Bloomberg to launch the Bloomberg Galaxy Crypto Index that will track the market performance of the 10 leading cryptocurrencies. When speaking to Business Insider, Mike talks about the crypto economy as “just one more building block which will, at one point, get pension funds and sovereign wealth funds all participating in the crypto economy.”
How does any fund manager help expert traders and investors keep track of and invest in cryptocurrency assets? How can they enable more investments and sustain growth? A managed accounts platform for fund houses is a great option. A technology-driven next-generation managed accounts platform provides investors with real-time visibility into their assets including cryptocurrencies – and is a cost-effective mode of performing high-volume trading.
Such managed accounts platform also provides benefits like speed, flexibility, and an enhanced user experience.
When it comes to cryptocurrency trading, here are some features of an efficient Managed Accounts Platform that are essential:
With more retail investors performing trades in digital currencies, fund managers need an easy-to-use platform where they can easily register and start trading. Obviously, the crucial requirement here is the ability to carry out trades in digital currencies.
By integrating with crypto exchanges like Binance, a functional managed account platform can do just that. Of course, the platform must also enable other administrative tasks like KYC compliance, while fund managers simply focus on building the customer assets.
A managed accounts platform should be user-friendly and easy to operate for fund managers as well as expert crypto traders. A better user experience is essential for more account opening and trading volumes. For example, a mobile-friendly platform can be operated by smartphone users or traders when on the move.
A managed accounts platform provides a single and unified trading account where all the trading-related activities can be conducted. Through unified dashboards, customers get complete visibility and transparency into their trading entries – thus enhancing customer experience.
There is no longer any doubt in the growing interest in cryptocurrencies not as a currency asset but as a financial asset. The success of digital currencies like Bitcoin is boosting investor interest as well as wealth management companies. For financial services companies, the question is only, how can they enable the digital currency trading needs of their investors?
As a next-generation fintech provider, Simple2Trade enables seamless trading through its managed accounts platform. What differentiates this platform is its user-friendliness and integration with crypto exchanges like Binance. Want to know more about how to trade on digital currencies? Get in touch with us to request demo.