This week, bitcoin has reclaimed the crucial level of $11,000; buoyed by stronger buying volumes and continued easy money policies by the Federal Reserve.
Last week, the research and data firm, CryptoQuant, noted a large spike in bitcoin transaction volume, but noted that the increased volume was not flowing to exchanges. Their educated guess at the time was that it was possibly an over the counter (OTC) buyer deal.
Yesterday, MicroStrategy MSTR CEO, Michael Saylor, revealed that the company had purchased an additional $175 million of bitcoin for their capital reserve, bringing their cumulative total to $425 million. Given the large purchases by MicroStrategy, the spike in transaction volume noted by CryptoQuant makes sense as one possible explanation.
MicroStrategy’s stock has been rewarded nicely for the decision, up approximately 20% since the announcement, sending a strong message to every Fortune 500 CFO.
Additionally, leading cryptocurrency exchange, Kraken, today announced that they have been approved by the State of Wyoming to become the world’s first Special Purpose Depository Institution (SPDI), i.e. the first crypto firm to become a US bank, tentatively called “Kraken Financial.”
The new entity will offer Kraken clients in the U.S. the ability to deposit USD and custody digital assets at a regulated state-chartered bank with several future services in the pipeline designed to appeal to institutions.
The first “Crypto Bank” is yet another foundational brick on the pathway leading institutional money like registered investment advisors (RIAs) to the front door of bitcoin and other digital assets.
In particular, Kraken notes that one of their future services will be digital asset “staking.” Staking provides token holders a yield as compensation for depositing, i.e. staking, their tokens in the ecosystem to secure the network. For example, per Staking Facilities, the staking asset Cosmos ($ATOM), has a current yield of 10% per annum.
Interestingly, Onramp Invest CEO, Tyrone Ross, noted earlier in the week that the attractive yields in digital assets were beginning to draw the attention of large RIAs given the low interest rate environment.
However, he reveals that “there are a lot of issues fiduciaries would face using some of the existing platforms…you are still not going to convince any SEC-registered RIA to use Kraken. The name does not mean anything to them.”
When asked if you think it’ll take a brand name like Fidelity or JP Morgan to offer custody and staking services for RIAs to enter — “100%.”
Despite the sentiment, Kraken’s bold move may pave the way for more reputable brands to eventually offer crypto friendly banking services like custody and staking. If so, these financial juggernauts would likely bring a tidal wave of buying demand for bitcoin and staking assets with them.
Bitcoin has had a strong week with bullish developments seemingly at every turn, but several obstacles remain, principally brand recognition for traditional asset managers. However, if even a fraction of the above comes to fruition, bitcoin will receive an incredible price boon.
Disclosure: The author owns bitcoin, ethereum, and solana.