Buy side emerges in latest CoinDesk cryptocurrency report

The latest research from CoinDesk has revealed the rise of Bitcoin and token diversification has created a sophisticated buy-side for cryptocurrency in Q3.

With Bitcoin returns reaching 332 per cent across July, August, and September, and all other digital assets reaching 690 per cent in returns within the same period, institutional investors have begun pouring money into cryptocurrencies at record volumes and cryptocurrency hedge funds are booming like never before.

Published and showcased today at Consensus: Invest event in New York, the Q3 State of Blockchain Report shows that a record $1.24 billion USD was raised in ICOs this quarter, ROI approached 7x, and more than 100 firms launched cryptocurrency hedge funds in 2017, with an estimated $2.3 billion AUM.

“Institutional investors, hedge funds, money managers, banks, and family offices have entered the cryptocurrency market in a major way,” CoinDesk director of research Nathan Bauerle said. “The State of Blockchain is the top resource for industry facts and figures, and Consensus: Invest is the place to educate the growing number of wealth managers on the rise, adoption, and potential of our new digital asset class.

“In Q3, we saw cryptocurrency outgain traditional investments like property, equities, and gold by several orders of magnitude; we saw popularity spikes in Bitcoin, Ethereum, and alt-coins, enhanced market analysis for valuations, regulatory firsts, law firms developing cryptocurrency specializations and increased enterprise adoption.”

In a statement, CoinDesk said $1.24 billion USD was injected into ICOs across Q3, up from $797 million USD in Q2. VCs backed blockchain projects in the amount of $1.4 billion USD in Q3, up from $235 million in Q2.

Bauerle said, “Ethereum, the smart-contract based blockchain protocol that most ICOs are launched on, surpassed and nearly doubled the number of bitcoin transactions across Q3,” Mr. Bauerle said. “This past quarter is also where cryptocurrency survived several technical and regulatory challenges. While multiple government agencies sought action, including Chinese regulators, shutting down all cryptocurrency exchanges, global bitcoin trade volume remained at an all-time high.

“The SEC published guidance on ICOs, highlighting the importance of the Howey Test, and several jurisdictions followed suit. Bitcoin’s resilience through the Q3 soft fork (SegWit) and hard fork (Bitcoin Cash) showed market longevity, and a positive run heading into Q4.”

The State of Blockchain Report also includes a sentiment survey, where thousands of cryptocurrency investors and experts were polled. Key findings revealed most investors and experts believed a hedge against the monetary policy was Bitcoin’s best quality. Seventy-two per cent of participants believe regulations will help the quality of ICOs while curtailing the quantity of ICO projects. The overall sentiment towards Bitcoin rebounded from 57 per cent positive in Q2 to 87 per cent positive in Q3, while 83 per cent of participants check cryptocurrency prices daily.