A Great Way Ahead for Institutional Investment in Cryptocurrency – Analytics Insight


Cryptocurrency

Institutional investors are slowly moving towards the cryptocurrency market

In the initial years, Bitcoin was considered one of the worthless digital assets that were favored by criminals. But gradually it has made a hallmark of institutional acceptance. This was driven by several factors that led to the outstanding performance of bitcoin. And another interesting thing is that family offices, traditional money managers, and hedge funds have a diverse perspective on cryptocurrency and its products and services. They also have the eye-watering US $ 17 billion worth of institutional capital flooding into the space this year alone.

Most of the institutional investors allocating a percentage of their portfolios to digital assets grow day by day. According to a recent survey, seven in ten institutional investors expect to buy or invest in cryptocurrency assets in the coming days. Nearly 1,100 respondents who were surveyed revealed that they already own such investments.

The big institutional players are coming up with their own blockchain solutions and platforms nowadays. For example, JP Morgan has created its own JPMC Blockchain Center of Excellence (BCOE) in 2015 to help in developing its blockchain solutions. But they too had many challenges which prevented them from investing directly in the crypto market.

As most of the challenges have been solved by the end of 2020, now consumers are well aware of cryptocurrency and are ready to use them in retail purchases too. And one reason for this is also the technological advancements that companies now have better access to crypto assets than ever before.

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But why do you think institutional investors want to invest in crypto?

As discussed above according to the survey involving over 400 pensions, financial advisors, hedge funds, endowments, and foundations.  22% of the respondents presently have exposure to digital cryptocurrency assets. 40% were open to making investments in the crypto market in the coming years. And another 72% would want to buy investment products that have a good weightage of digital assets.  57% would like to buy crypto assets directly or from digital asset companies.

This research gives strong evidence that institutional investors are for cryptocurrency as an asset class. And there is also growing among the institutional investors and national governments in the crypto market. Though there is a lot of interest, the only big concern for institutional investors is the price volatility. Unlike the traditional assets currently in investor’s portfolios, cryptocurrency is harder to forecast due to its volatility.

With new tools and platforms which are targeting institutional investors, it is crystal clear that the industry is warming up for big money to enter into the crypto market.

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