In today's Drip, we want to talk about the inclusion of institutional investors in cryptocurrency and what it means for the future of crypto. There are many avenues for Wall Street to gain exposure to crypto and for Wall Street to create broader on-ramps for traditional investors who also want easier access to crypto.
18 months ago, talking about institutional demand for crypto was wishful thinking. Now, however, we can barely keep up with all of the traditional finance articles about institutions, private wealth funds, sovereign funds, and more that are gaining exposure to crypto.
Let's dive into the backdrop of institutional demand.
The financial system in the United States has developed serious problems that has been rearing its head since the early 2000's.
The private and public debt burden, globalization, retirement crises, credit crises, and technology eating up jobs. Without fiscal stimulus, rate cuts, QE and other Federal Reserve and Central Bank tools, these problems would have devastated the United States and the world during the Great Recession (2007-09) in much more substantial ways than it did.
Covid-19 became an event that allowed the Federal Reserve to implement these same tools under the guise of a global pandemic, also potentially becoming the catalyst for possibilities like deep inflation, hyperinflation etc.
While inflation will most undoubtedly take its toll on the broader public, a period of hyper-inflation is not very likely. This sentiment echoes what happened in the Great Recession, in which the Fed spearheaded years of quantitative easing (i.e. money printing and rate cuts) that left the public shouting for hyperinflation.
Yet it never came. Why?
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