Cryptocurrency Market ‘Will Be Much Bigger than it Is Today’ Says JPMorgan Alum
‘Trench Warfare’ Between Big Banks and Crypto Upstarts
Masters told Bloomberg that even if only five percent of the “total financial ecosystem accrues to cryptocurrencies [that] market will still be much bigger than it is today.”
The total market capitalization of all cryptocurrencies currently hovers at about $399 billion, according to CoinMarketCap. But that’s a drop in the bucket compared to where the market is going, Masters predicts.
While sham initial coin offerings (ICOs) such as the $32 million Centra Tech debacle have generated headlines, Masters said the negative image of crypto is overblown because of the media attention the bad apples get. He pointed out that fewer than three percent of small ICOs make it through a “multi-stage screening process” that would weed out potential scams.
Masters, who’s also the chief investment officer at Global Advisors, previously ran JPMorgan’s New York energy trading operations in the 1990s before launching his own commodities fund. He began investing in bitcoin in 2014 — when prices hovered between $325 and $800 — and he has never looked back.
Masters previously said that big investment banks like JPMorgan initially dismissed the cryptocurrency industry because there’s an unspoken “trench warfare” going on between traditional financial services and digital newcomers.
“There’s something of a trench warfare going on between what I call analogue financial services companies and digital financial services companies,” Masters told Business Insider in February 2018.
“The analogue financial services companies are not in this game at all. They don’t want to touch the core currency, which is bitcoin or ethereum. They’re suspicious about the industry itself. A lot of people think it’s a criminal enterprise and a Ponzi scheme and a scam.”
‘Banks Have Failed to Innovate’
Daniel Masters said the major investment banks’ collective resistance to crypto is steeped in fear that the nascent industry will render traditional banking obsolete.
“Banks have sat on their laurels for 30 years. I just threw out my checkbook. It looks exactly the same as it did in 1985. [Banks] have absolutely failed to innovate in any way, shape, or form and now they’re paying the price.”
Masters said traditional finance has become so mired in regulations that “nobody enjoys working in it anymore.” In contrast, the decentralized, mostly unregulated crypto ecosystem is fresh, exciting, and innovative.
Despite the initial skepticism that traditional banks had toward cryptocurrencies, digital assets are slowly gaining traction. The Cboe and CME both recently introduced bitcoin futures contracts and Goldman Sachs is also reportedly considering launching a bitcoin trading desk.
Ditching Wall Street for Crypto Startups
Similarly, there’s a surging trend of investment banking veterans who are ditching traditional finance jobs on Wall Street to join crypto startups, as BTCManager has reported.
Many top business schools such as Wharton and Stanford have also expanded their course offerings to include bitcoin, blockchain, and the cryptocurrency market amid ballooning demand from recruiters, especially those in venture capital.
“We’re at the point where there’s a critical mass to teach this domain,” Wharton professor Kevin Werbach told CNBC.
“There will be a real phenomenon in business for the foreseeable future. And five years down the road, there won’t be too many major business schools that don’t offer similar classes.”