• Compass Point Research and Trading projects Voyager to gain 1 million accounts, $11 billion in assets under management by end of 2022.
  • Galaxy could see near-term losses but expected to capitalize as more institutions become interested in crypto

Crypto trading app Voyager Digital is better positioned than some of its larger peers to attract users entering the market, while Galaxy Digital offers a unique investment opportunity as it seeks to institutionalize the digital asset space, according to recent notes by Compass Point Research and Trading

Voyager’s zero-commission trading model, broad array of crypto trading pairs and large number of coins gives it a stronger value proposition than competitors like Coinbase, Square and PayPal, Compass Point senior analysts Michael Del Grosso and Chris Allen wrote in a June 20 research note.

“Overall, we believe that while competition may emerge in the long-run, the breadth of Voyager’s existing trading capabilities combined with the unique pricing model afford it a significant runway for growth over the near-term,” they said. 

The company, which Compass Point rated as a buy, also has more than $100 million that it plans to spend on marketing to grow its user base. The earmarked funds come as Google earlier this month lifted its three-year policy that banned crypto exchanges and companies from using its advertising services. 

Compass Point projects that its position in the crypto space and earmarked marketing spend could result in $1 million incremental funded accounts and drive $11 billion assets under management by the end of 2022. 

“As with most crypto companies, we have a focused eye on DeFi — and specifically decentralized exchanges — although we believe in its current form Voyager is built primarily for the crypto naïve rather than the crypto native,” Del Gross and Allen noted. “We believe considerable greenfield opportunities exist to penetrate users and become their de facto onramp from fiat to crypto.”

Meanwhile Compass Point views Galaxy Digital, which it gave a neutral rating, as a “first-mover” in the crypto prime brokerage, trading, asset management, venture capital, investment banking and mining finance businesses.  

Goldman Sachs last week partnered with Galaxy, naming the crypto firm the liquidity provider for its bitcoin futures block trades. Galaxy, serves as a market maker in over 90 digital assets and works with more than 300 institutional trading counterparties.

“We believe as more institutions look to get involved in crypto, Galaxy Digital will likely be their first call,” Del Grosso wrote in a separate note. 

The news of the partnership with Goldman came after Galaxy announced the acquisitions of Vision Hill and BitGo

The buy of Vision Hill helps the company provide institutional-grade crypto fund-of-funds and investment consulting solutions for allocators like pensions, endowments and foundations, while BitGo brings to Galaxy $40 billion in AUM and 400 institutional clients.  

“Despite increasing adoption of digital assets and cryptocurrencies, legacy incumbents have limited infrastructure to service the unique technological demands of this asset class,” the June 20 Compass Note research note states. “…BitGo enables the widespread adoption of crypto through its leading position in custody, security, insurance and liquidity.”

The long-term prospects of the New York-based crypto firm could be dampened by possible near-term losses amid the recent sell-off, Del Grosso added. The price of bitcoin fell below $32,000 on Monday morning — a two-week low — as China continued its crackdown on crypto mining. 

  • Ben Strack is a Denver-based reporter covering macro and crypto-native funds, financial advisors, structured products, and the integration of digital assets and decentralized finance (DeFi) into traditional finance. Prior to joining Blockworks, he covered the asset management industry for Fund Intelligence and was a reporter and editor for various local newspapers on Long Island. He graduated from the University of Maryland with a degree in journalism. Contact Ben via email at [email protected]