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Galaxy Digital CEO Mike Novogratz has described the broader crypto market as “apathetic” – or unenthusiastic – largely due to institutional investor shy away from cryptocurrencies.
In a June 1 interview with CNBC, Novogratz said that while relatively small retail buyers add some stability to the market with their modest holdings, the lack of large buyers is becoming a problem.
“There is a constant demand from the retail trade. We see it on all platforms and there is not much institutional enthusiasm right now.”
The claims echoed a May 31 report by CoinShares head of research James Butterfill, detailing that institutional buying of digital assets resulted in an outflow totaling $39 million last week, the sixth consecutive week of outflows.
Novogratz, however, pointed to two important developments in Asia that could help turn the tide.
First, he noted that Chinese social media app WeChat is now offering bitcoin (BTC) price quotes on its app, which he considers a milestone given its popularity. According to Statista, WeChat has 1.3 billion monthly active users at the time of writing.
Wechat is available for #Bitcoin search and only Bitcoin. A small but big step of China/HK embracing cryptocurrency pic.twitter.com/DHq4uqnq5C
— Qinwen Wang (@Qinwen_Wang) June 1, 2023
Second, Novogratz looked to Hong Kong, which has now officially begun allowing retail clients to trade crypto on regulated exchanges, indicative of growing adoption in Asia.
In an interview with Cointelegraph, Tommy Honan, head of product strategy at Australian cryptocurrency exchange Swyftx, agreed that the crypto market has run out of steam over the past month.
“Activity levels among institutional investors are definitely more muted. But not only institutions, retail investors have been hit by pressure on the cost of living,” he said.
While crypto firms struggle to cope with an increasingly unreliable regulatory environment in the US, Honan still expects a strong price recovery when major firms decide to come back.
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“Institutions will return to the market, and when they return, they will return hard. I just don’t expect it to happen in the US until one of two things happens,” he said.
“You need clear and reasonable rules for cryptocurrencies. Or you need the Republicans to win next year’s US elections. Cryptocurrency almost instantly became an insanely partisan issue, which is exactly what the industry didn’t want or need.”
Like Novogratz, Honan says Hong Kong represents a unique opportunity for the crypto market, unleashing a new wave of investors into the market while also offering space for US firms to set up shop if needed.
Chinese Central Television station has just broadcast news regarding Hong Kong letting people buy Bitcoin, Ethereum, and other coins.
This is huge news! China is waking up to cryptocurrency again.
What is happening in Hong Kong is only possible with approval from Beijing. Get ready! pic.twitter.com/Zxdi7UZNHK
— Lark Davis (@TheCryptoLark) May 24, 2023
“We are following developments in Hong Kong very closely. If mainland China uses Hong Kong as a testing ground for the safe adoption of cryptocurrencies, this will be a significant tailwind for the market,” Honan said. “We were all looking in the West for the next bullish trigger. Maybe we should have looked to the east.
Now that Hong Kong is open to crypto-related business, a growing number of firms are currently vying for a license.