All eyes turn back to crypto

As market volatility continues, there appear to be signs of renewed investor confidence across the crypto space, reflected by digital assets’ total market capitalisation climbing back above the $1 trillion mark in mid-July, following weeks of widespread selling.  

Whilst it’s premature to say the ‘winter’ is over, early signs of a rebound suggest some green shoots of ‘spring’. 

From an LMAX Group perspective, some key drivers of this renewed confidence could be put down to two core factors; increased regulatory interest and greater institutional activity. Both are crucial to establishing crypto as an increasingly attractive investment opportunity for the wider market. 

Regulation to leave its mark 

Whilst we’re seeing a number of non-mainstream crypto coins nearing zero in value, we’re also seeing a clear flight to quality both in terms of the coins themselves and the digital asset companies. 

Across the globe, regulators are focusing their attention on crypto like never before, whether that be rightly cracking down on violations around insider trading and fraud, or imposing standards to protect consumers and reduce market fragmentation. 

In the UK, there are two inquiries underway. One by the Treasury on whether the Government effectively understands the opportunities presented by crypto-assets and the second by the Crypto and Digital Assets All Party Parliamentary Group (APPG) focused on the approach the Government is taking to ensure the UK becomes a global hub for crypto investment. In Singapore, the MAS is broadening its crypto regulation, particularly from a licensing perspective, examining how to apply technologies to solve issues including cross-border settlement. 

Challenging and changing perceptions 

Despite global macro headwinds, the past few months have seen an increase in institutions establishing more of a foothold in the cryptocurrency ecosystem, whether that be through launching dedicated crypto funds, acquiring stakes in digital assets infrastructure or by providing clients with seamless direct access to digital assets through strategic partnerships - such efforts all bolster confidence in the crypto market and all participants. 

These initiatives, and other crypto offerings – including retirement plans giving customers the ability to add bitcoin to their pensions - are reflective of LMAX Group’s own innovation and intentions in the sector, following on from our plans to launch cryptocurrency futures, in partnership with SIX Group, settled in USD and in cash, providing a brand-new client offering. 

Such landmark developments across the industry serve to strengthen the view that institutional demand continues to grow, particularly as investors look for areas where returns can be generated in the current environment. 

The road ahead 

Whilst macroeconomic conditions are proving an unprecedented challenge, crypto currency appears to be rising in stock once more. With the right regulation, LMAX Group believes crypto will continue to grow and mature as an asset class, as evidenced by the ongoing innovation and new products we are seeing during what looks like the early buds of a crypto ‘spring’. 

LMAX Digital is part of the LMAX Group, is a independent operator of multiple institutional execution venues for FX & crypto currency trading.   

We've been at the forefront of the institutionalisation of crypto trading since 2018 - with a 100% exchange uptime - ensuring orderly markets during times of the highest volatility.  

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This post is commissioned by LMAX and does not serve as a testimonial or endorsement by The Block. This post is for informational purposes only and should not be relied upon as a basis for investment, tax, legal or other advice. You should conduct your own research and consult independent counsel and advisors on the matters discussed within this post. Past performance of any asset is not indicative of future results.