CNBC's Brian Kelly: Institutional Herd Is Starting to Enter the Crypto Market

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The founder and CEO of crypto investment firm BKCM says the “institutional herd” is starting to move into the cryptocurrency market.

Brian Kelly told CNBC that Fidelity’s bold entrance into crypto combined with Yale’s new investment signal a shift that will continue to grow through the new year.

“Custody has been a very big hurdle. And having somebody like Fidelity put their stamp on it and say yes, this is a new asset class and we’re going to custody this – and I believe they even said they may have some insurance. So that is a step closer.

Now, you have Yale investing. The Yale endowment. This has put everybody on notice at least in the institutional area. You either have to have a strategy for investing in this, or you have to have a reason why you’re not. So I would expect over the next three months, six months, you start to see the proverbial herd really start to turn in this direction. And I can just tell you from the conversations we’ve had for our crypto hedge fund, that herd is starting to enter this market.

I believe the fund that Yale is investing in is 70% cryptocurrencies, 30% infrastructure plays. But it is investing in a fund. Again, we need new buyers. We need fresh capital coming into this place. The relentless selling over this last year has been painful. It appears to me to be done. But we don’t have that new buyer yet. So that’s why we’re all looking for these new avenues of capital coming into the market.”

Kelly says it won’t be long until firms like Charles Schwab and other big players in retail investing offer digital assets to their customers.

“It would not surprise me if some of those companies already have something working in the background. I would think it’s probably the first quarter of 2019. I mean, if you’re looking at this there’s a couple of different things. One, Fidelity is in it. Also remember, some of the startups like the Robinhood app. They launched crypto and got a million users in four days. So if you’re at Schwab or you’re at Etrade and you look at that and say, ‘Hey, you know what? Where are the customers? They’re there. We have to offer this product.’

I would expect your traditional retail Etrade, Schwab, those type of companies. I would expect beginning of quarter one 2019 that they would offer it to their retail investors.”