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

BNY Mellon, the oldest bank in the United States, said on Tuesday that it would soon custody cryptocurrencies for its clients. In September, private equity behemoth KKR made part of its health care fund available on layer-1 blockchain, Avalanche. The string of news follows closely on the heels of a partnership between $10 trillion asset manager, BlackRock, and Coinbase. 

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

These moves mark key milestones for traditional financial institutions, as Wall Street begins treading deeper into the nascent – and often volatile – world of crypto. 

John Haar, a managing director at digital asset services platform Swan Bitcoin, previously had a 12-year stint at Goldman Sachs. He says bitcoin is the biggest contender to gain traction in legacy finance and pull institutional interest in further.

“In terms of what they actually are going to get on board with from a business perspective, I would agree that Bitcoin has taken the vast share 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 offer 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, purchased $425 million worth of bitcoin, beginning in August of 2020. 

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

First, the value prop of bitcoin, Haar says, is the concept of “sound money,” a currency that isn’t prone to a sudden depreciation or appreciation 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’s 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 them potentially getting on board. I do think as institutions come into this space, it’ll be easier for them to make the case to themselves and to investment committees for bitcoin.”

Haar also says that institutions have seen bitcoin weather the bear market better than most. Altcoins like solana and avalanche are both down nearly 90% from their all-time highs, respectively, according to Messari on Friday. 

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

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

Elsewhere, other have argued that ethereum will be the next big “on-ramp” for institutional adoption in crypto. This is, in part, due to the Merge, the smart contract network’s upgrade, which cut its energy usage by more than 99% and reduced its issuance.

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

Lim added: “We’ve seen massive inflows into ethereum as a funding asset before. In the 2017 cycle, retail investors piled into ethereum as an on-ramp into ICOs. In this cycle, institutional investors recognized ethereum as the base layer of much of DeFi and stablecoin activity, so a lot of fresh capital entered the asset class via ethereum over bitcoin.”

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