Bitcoin: institutional investors are not influenced by the halving

According to Kevin Koh, former partner of Goldman Sachs and CIO of Spartan Capital, institutional investors are not being influenced by the bitcoin halving and therefore are not investing in cryptocurrencies.

The third bitcoin halving is expected in May 2020 and is not just a predictable event. In fact, it is also considered one of the most important fundamentals in terms of the impact it could have on BTC’s value in the long term. 

For example, Paolo Ardoino, CTO of Bitfinex and Tether, said:

“The Bitcoin halving is a key moment for the entire Bitcoin community. In a few months time, the block reward will be cut in half, reducing the supply of new Bitcoin and thereby increasing levels of scarcity. So from a financial markets point of view, we should see a decreased sell pressure on the markets due to a lower number of bitcoins being available to miners. This makes it more likely that we will see a medium-term increase in the price of Bitcoin”.

But, despite this, during the Blockcrunch podcast, Koh told Jason Choi that it is highly unlikely that large institutional investors will believe it will have a strong impact on BTC price movements. 

In fact, according to Koh, even the crypto community doesn’t completely agree that the halving is being considered by investors, and this would cause large investors to be extremely cautious about it. 

This is what Koh said in this regard: 

“That’s not to say that you wouldn’t find an odd CIO who has researched the asset class very closely and who has a strong view and wants to deploy, but I’d say for the average institutional investor, that’s probably not what’s driving their decision to invest in crypto”.

Moreover, he added that there are different types of institutional investors and that they often do in-depth due diligence before deciding to invest, in part because they are based on solid governance processes that require the approval of the board, especially when it comes to investments in new high-risk asset classes.

According to Koh, these same governance processes could actually be the main drivers of the timing of such investments by institutional investors, thus having a much greater impact in this respect than the upcoming halving. 

For example, he revealed that, according to a recent Bitwise survey, only 6% of advisors are investing their clients’ funds in bitcoin or crypto assets, while a large majority of the rest are not planning to invest in crypto assets in 2020 and about 55% are already confident that they will not. 

In other words, caution still prevails among this type of investor and could continue to prevail for at least the rest of the year.