- Hong Fang, an ex-Goldman Sachs investment banker, is the CEO of the crypto exchange Okcoin.
- She said institutional investors are buying more altcoins than bitcoin on Okcoin for the first time.
- Fang shares 3 popular altcoins on its platform and how big investors view meme coins and DeFi.
The total value of the cryptocurrency market blew past $3 trillion for the first time on Monday as bitcoin hovered near its all-time high. But it’s altcoins – which as a whole are worth $1.6 trillion – that are making the biggest moves.
As of midday Monday, ethereum (ETH) surged almost 4% in the prior 24 hours to reach a new all-time high of $4,772. Binance coin (BNB), solana (SOL), and terra (LUNA) have also advanced more than 20% over the past week, while avalanche (AVAX) shot up over 40% in the meantime, CoinMarketCap data shows.
According to one crypto exchange, the boom in altcoins is not only driven by enthusiastic retail investors. They find that institutions spanning hedge funds, venture-capital investors, brokers, and trading desks are also playing a big role in the bullish sentiment.
“In traditional financial markets, you pretty much see institutions leading the trends, retail customers tend to follow suit. In crypto, it always has seemed to be the other way around,” Hong Fang, CEO of crypto exchange Okcoin, told Insider in an interview.
Fang, who previously spent eight years within Goldman Sachs’ investment banking division, knows all too well how cautious institutional investors can be. On Okcoin’s platform, she has always seen big investors focus on bitcoin- and stablecoin-related transactions – until this year.
For the first time, altcoins made up 53% of total institutional buys on Okcoin between September last year and this year, which marks a 23% increase from the previous period, according to the firm. The trend is in line with Genesis Global Trading’s Q3 Market Observations report, which states that bitcoin demand continues to trend downward as institutions adopt decentralized finance and top altcoins including solana, terra, avalanche, and fantom (FTM).
3 altcoins institutional investors are scooping up
Interestingly, while institutions have historically preferred altcoins that were at least four years old, they are making earlier and riskier investments in younger crypto assets on Okcoin’s platform, the firm observed.
“Institutions are watching the landscape very closely. Some of them are approaching it from a yield perspective, some of them are approaching it from a trading perspective, many of them are probably doing a combination of both,” Fang said. “But they are picking up signals from the retail market.”
For example, MiamiCoin (MIA), which was launched only in August, became the fourth-most-popular asset among institutions on Okcoin in the third quarter. The MIA token came to market via CityCoins, a nonprofit and open-source protocol that allows investors to support their city by growing its crypto treasury while earning rewards for themselves.
The MIA token has surged 31.4% in the past month, according to CoinGecko pricing. When bought or mined, it allocates 30% of its reward to the city.
Another sought-after altcoin on Okcoin’s platform is stacks (STX), a protocol that enables decentralized applications and smart contracts on the bitcoin blockchain. The protocol also powers MiamiCoin. Investors can mine STX tokens and send them to CityCoins to generate new MIA tokens. The STX token has shot up 1,259% over the past year.
High-flying layer-one protocol avalanche is also in demand on the Okcoin platform, ranking the exchange’s sixth most popular crypto asset among institutions this year. The protocol, which claims to be “blazingly fast, low-cost, and eco-friendly,” recently launched a $200 million “Blizzard Fund” to invest in early-stage DeFi, NFT, and other projects across the Avalanche ecosystem. The AVAX token has skyrocketed 2,557.9% over the past year.
Yes DeFi, maybe meme coins
“Trading desks and market makers are always active in various assets, regardless of whether it’s bitcoin or altcoin, major blue-chip tokens or meme coins,” she said. “What matters is trading profitability.”
On the other hand, longer-term-focused investors tend to tilt towards ethereum and other blue-chip altcoins. But investors across the spectrum seem to demand greater exposure to decentralized finance investing. In the third quarter, the number of asset managers, neo-banks, and others using the firm’s DeFi investing tool Okcoin Earn grew by 62%, according to the firm.
Fang said the DeFi platform, which directly connects its customers to DeFi protocols without charging any transaction, gas, or service fees, has seen strong demand from institutional investors in part due to the decent returns or high annual percentage yields.
One of its DeFi strategies, which asks investors to deposit MIA tokens for a fixed amount of time in order to earn STX tokens, has an estimated APY of 280%. Another strategy that involves depositing STX tokens for a fixed term to earn bitcoin has an estimated APY of 10%, according to the firm.
“You can basically buy and stack MiamiCoin. In return you get STX,” Fang explained. “Some of the customers would actually buy and stack MiamiCoin, get STX and then turn around stack STX to earn BTC. They think that it’s actually pretty good return.”
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