Bitcoin Could Be Wall Street’s Ramp To Crypto: Goldman Alum

• John Haar is the CEO of the crypto service platform Swan Bitcoin.
• Haar breaks down the concept of “sound money” and bitcoin’s value prop for traditional finance.
• Amid a prolonged bear market, giant Wall Street firms continue to announce crypto partnerships.

BNY Mellon, the oldest bank in the United States, said on Tuesday that it will soon store cryptocurrencies for its customers. In September, private equity giant KKR made part of its healthcare fund available on the layer-1 blockchain, Avalanche. The news series follows close on the heels of a partnership between $10 trillion fund manager BlackRock and Coinbase.

“Our institutional clients are increasingly interested in gaining exposure to digital asset markets and are focused on how to effectively manage the operational lifecycle of these assets,” said Joseph Chalom, BlackRock’s global head of strategic ecosystem partnerships, in an August blog post.

These moves mark important milestones for traditional financial institutions as Wall Street begins to step deeper into the nascent — and often volatile — world of crypto.

John Haar, CEO of digital asset services platform Swan Bitcoin, previously held a 12-year position at Goldman Sachs. He says bitcoin is the biggest competitor to gain traction in legacy finance and draw further institutional interest.

“In terms of what they’re actually going to get on board with from a business perspective, I agree that Bitcoin has taken the big part of that,” Haar told Insider in an interview.

Investors saw the first wave of institutional interest in crypto through bitcoin as well.

Morgan Stanley became the first major US bank to give certain wealthy clients exposure to bitcoin. Meanwhile, Paul Tudor Jones – one of the most successful hedge fund managers – said that the crypto was in his portfolio. MicroStrategy, a publicly traded software company started by Michael Saylor, bought $425 million worth of bitcoin as of August 2020.

“The next logical stop for bitcoin is to replace gold as a non-sovereign store of value,” Saylor said at MarketWatch’s Best New Ideas in Money Festival.

First is the value of bitcoin, says Haar the concept of “sound money”, a currency that is not subject to a sudden depreciation or increase in value. The token is “scarce”, “censorship resistant” and a store of value because it has a fixed supply of 21 million and lacks a centralized governing body. (Essentially, there is no Federal Reserve of bitcoin, where you can inject more tokens during a bear market.)

“I think Bitcoin is an easier sell, but I think we’re still very early in terms of potentially getting on board. I think as institutions get into this space, it’s going to be easier for them to make the case for themselves itself. and to bitcoin investment committees.”

Haar also says that institutions have seen bitcoin be better in the bear market than most. Altcoins such as solana and lavanche are both down nearly 90% from their record highs, according to Messari on Friday.

As the Federal Reserve continues to raise interest rates to combat near-40-year high inflation, bitcoin’s price has also continued to decline. Both ethereum and bitcoin were down more than 70% from record highs on Friday, according to Messari, with the industry’s total market capitalization down by two-thirds as well.

“I’m aware that bitcoin’s price has dropped quite dramatically in 2022, but there are some crypto tokens that have literally gone to zero,” he said. “Relatively speaking, I think you could argue that bitcoin is a safer, more conservative investment compared to these things.”

Elsewhere, others have argued that ethereum will be the next big “on-ramp” for institutional adoption in crypto. This is partly due to the merger, the smart contract network upgrade, which cut energy use by more than 99% and reduced emissions.

“Will a flip happen? It will take another big macro rally for risk assets to cement institutional preference for ethereum,” Joshua Lim, a former head of trading at Galaxy Digital, previously told Insider.

Lim added: “We have seen massive inflows into ethereum as a financial asset before. In the 2017 cycle, retail investors piled into ethereum as a run-up to ICOs. In this cycle, institutional investors recognized ethereum as the base layer for much of the DeFi- and stablecoin activity, so a lot of fresh capital entered the asset class via ethereum over bitcoin.”