A New Inning for the Digital Asset Class

The need for institutions to deploy capital at scale is essential for this era of the crypto industry


gnepphoto/Shutterstock.com modified by Blockworks


It is no secret that the past few years of the digital asset class have been ripe with hype and speculation. But amidst all that noise, the burgeoning technology branched into new industries with profound real world applications.  

And according to Michael Lau, Senior Vice President & Global Head of Sales of Bullish, this underlying momentum is carrying the industry into a new inning. In a Blockworks webinar on Regaining Institutional Trust, Lau said:

“We are at a stage now where the major trajectory [of the crypto industry] is self-sustaining. And I think the crypto winter is only going to continue to push more of these secondary branches of Frontier use cases [like NFTs, DeFi, payments and tokenization] forward.”

Lau points out that the winter phase of the market cycle is particularly exciting because it forces existing and new projects to create things with real value – products people will spend money on. And as the industry solves for transparency and trust, it needs to consider the scale required to complete the “jobs to be done” in this new era of real world application. 

This scaling needs to address two major needs. First it needs to provide better institutional workflow and secondly it needs a blended market structure that can funnel real world value throughout the ecosystem. 

Better institutional access 

The need for institutions to deploy capital at scale is essential for this era of the crypto industry. It greases the wheels of these new projects, helping them find their place in the market. 

The fractured liquidity across exchanges makes it difficult for institutions to invest. They need greater stability, familiarity and regulatory clarity of the legacy system, and less complexity. 

Bullish is an exchange that recognizes these challenges and has a clear vision on how to solve them.

With respect to stability, the answer is to create greater market depth within key cryptocurrency markets. Expanding the size of markets between fiat currencies (stablecoin or otherwise) paired with the top 10 cryptocurrencies such as BTC and ETH would eventually bring tighter spreads, more predictability, and less volatility.

This is exemplified by the 12 years of market data for the BTC/USD pair. As bitcoin markets spring up over the world and more money enters the market, a marked decrease in volatility can be observed over the last decade. This reality of long-term stability is in contrast to the narrative that Bitcoin is a highly volatile asset. While there are times of short-term volatility, these moves are often in line with other traditional asset classes. But unlike many of those assets, Bitcoin has moved in a remarkably consistent upwards direction.

Blending the old with the new

Secondly, Bullish recognizes that in light of recent DeFi hacks and exchange collapses, there is a need for regulated entities and individuals to transact and invest in a safe and familiar environment. Their unique approach to this problem is a blend of order book and automated market maker technology. This offers the familiarity of market making to major institutional investors who wish to participate in the industry. As a regulated exchange, Bullish is committed to fostering a compliant environment for all users. Even before recent events proved the importance of such measures as a safeguard for user funds, since its launch, Bullish has properly KYC’d each participant on its platform. 

This blend offers new market depth and order efficiency. It enables customizable spreads and a smoother book of bids and offers than traditional exchanges. 

This means that more individuals and institutions can participate in market making opportunities. Since far more people can contribute their capital to the market, Bullish anticipates this will create better institutional workflow and reduce the overall volatility of the market.

When creating new bridges, it is important to utilize the best of the old world. This can be done by recognizing where the old system excelled, and capitalizing on those aspects by rewrapping them in new technologies. 

This example shows that Innovators can combine the latest upgrades that the cryptocurrency world has to offer. The industry needs players with a strong dedication to regulation and compliance – and who are motivated to build a long lasting financial product. 

In order to get digital assets in the hands of billions, approval and endorsement will only be given to those who prioritize real world value.

This content is sponsored by Bullish.

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