German institutions can now invest a significant portion of their assets into cryptocurrencies, and recent market research estimates that this will bring a much-needed liquidity injection into the space.
What Happened: According to a recent Bloomberg report, a law that came into effect in Germany on Monday allows so-called Spezialfonds to allocate as much as 20% of their holdings to cryptocurrencies such as Bitcoin (CRYPTO: BTC). Those funds can only be accessed by institutional investors such as pension companies and insurers and currently manage about 1.8 trillion euros, around $2.1 trillion.
Recently, researchers surveyed experts and representatives of investment funds present in the DACH region, which includes Austria, Germany, and Switzerland, and showed that 46% of them are interested in cryptocurrencies.
According to the research, this will likely result in a capital injection of anywhere between $100 billion and $657 billion into the crypto market.
While up to 14% of the respondents were interested in decentralized finance (DeFi), it is a safe bet that a significant portion — if not most —
of this money will flow into Bitcoin’s market cap, which stands at $710.5 billion.
Why It Matters: This would be a liquidity injection so significant that it can be expected to have a major impact on the coin’s price, possibly enough to jumpstart another bull market if the winds are favorable.
The survey revealed that 88% of funds in the region are not currently invested in crypto, but 46% are interested in gaining exposure to such assets and are ready to study them.
Approximately 7% of the respondents are at a late-planning stage of the investment and consider investing in crypto this year, while only 4% of them already included crypto in their portfolio.
It is a safe assumption that many more funds in the region will decide to invest in crypto now that they got the regulatory go-ahead considering that 86% of the respondents cited regulatory uncertainty,as the key barrier to investment in digital assets.
Also, the lack of service providers and infrastructure was cited as a major obstacle by 57% of the respondents.