Mainline financial institutions consider digital currency options

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The cryptocurrency market continues to garner major headlines and is attracting the interest of major banks and hedge funds. Financial conservatives are not about to rush into bitcoin and other types of digital currency, but they can’t stand the thought of losing out on millions, possibly billions, of dollars by holding back too long. Goldman Sachs has hired its first-ever cryptocurrency advisor and trade papers say the company is giving serious consideration to opening an experimental trading desk specifically for cryptocurrency.

The growing interest in the cryptocurrency market by big league money players indicates that the time may soon be at hand when it sheds its niche market label and becomes a mainstream financial option. According to a recent survey by Thomson Reuters, a good twenty percent of four hundred financial firms surveyed admitted they are now preparing to engage in cryptocurrency trading within the next year.

 This means that everyone is watching the cryptocurrency market very carefully, following every twist and turn, every up and down, of this extremely volatile new alternative to hard currency. And the consensus by no means is yet ready to promote aggressive acquisition of bitcoin or any other cyber currency. Cryptocurrency has many critics and skeptics among financial professionals, and they are not shy about warning against investment. But the fact remains that cryptocurrency exchanges in cities like Tokyo and Seoul are firmly in place, and doing a brisk business. And real-time cryptocurrency prices are now available on several websites, making it relatively easy to track prices minute by minute.

The cryptocurrency markets have plateaued since the beginning of 2018. They’ve taken a nosedive, falling from over $800 billion in valuation back in December to just around $400 billion as of the middle of May this year. Backers of bitcoin and other cryptocurrencies are pushing for an infusion of institutional funds as a spur that will encourage this controversial market to recover the loss and soar even higher.   

But the very volatility of cryptocurrency is sometimes seen as a great opportunity by organizations that are bullish on the concept. American Express has even started their own cryptocurrency brand, called Abra. It caters to high-end individual investors and commodity speculators, as well as the more daring hedge fund managers.

But can cryptocurrency ever be tamed and regulated enough to appeal to mainline investors? Pension funds, which make up an enormous part of the financial investment capital today, are extremely hesitant to tell their clients/shareholders that their retirement funds now partly depend on the whims of the cryptocurrency market. Blue chip it’s not. Some experts, like Addiction Now, also suggest that the mental health of many financial advisors deserve attention as well just like in the drug-laced days of the ‘90’s Wall Street.

And those who manage 401(k) accounts are leery as well. These managers are constantly looking for ways and means to increase the profitability of their investments, but at the same time are restricted by federal law as to what kind of financial instruments they can invest in for their clients. Cryptocurrency is not an acceptable risk to most of these money managers, and, in fact, if Congress does not speed up its examination and regulation of cryptocurrency markets there is very little chance that anyone outside of daredevil autonomous investors will ever have their own cryptocurrency account. 

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