2023 Could Be The Year for Institutional Investors


Like any other industry, the blockchain and crypto space needs capital to grow and it’s no secret that capital becomes precious in challenging economic conditions. This fact compels us to carefully track and follow where major investors are willing to put their money as they know their way quite well around fundamentals.

Seasoned investors have survived various market cycles. With years of experience, they set their aim way higher than just coming out of a bear market alive; they take the opportunity to explore potential sections, expand their knowledge about them, and start building a strong foothold as many others are busy speculating and wrapping their heads around the markets.

Additionally, the gloomy conditions make them more cautious about the businesses they look into. They thoroughly analyze the fundamentals as they try to find the next venture that would reward them in the next market turn.

They know, better than most, that no market cycle will last forever and they want to be fully equipped and ready as the bear market makes way for a blooming bull market.

Despite The Crypto Winter, Institutional Investment Increased in 2022

Just recently, Fidelity published the results of an interesting survey on digital assets and how institutional investors have been treating this novel asset class during 2022. According to the survey, even though the markets are suffering from the overall economic turmoil and despite multiple blows in the past year, institutional investors expanded their exposure to digital assets and are more positive about their future.

“High-net-worth investors, crypto hedge funds/venture capital, and financial advisors” are the ones who adopted virtual assets the most in the past year. They stated that factors such as decentralization and innovation alongside the high potential for future growth were the main reasons behind their investments.

Interestingly, 74% of the investors are still looking forward to expanding their positions even further, a slight increase compared to last year. This growth may come as a surprise considering the recent negative incidents within the space.

Bitcoin ETFs and More Clarity on Regulations Are Still On Top of the Investors’ List

Bitcoin ETFs are by far the most appealing product for investors, a similar pattern we are witnessing in Europe, the US, and Asia alike. We had some improvements in Bitcoin ETFs this year, however, the US market still lacks an ETF with direct exposure to the largest digital asset.

And it’s no surprise that institutional investors are seeking more clarity on the regulatory status of the space. Even though various bills focused on the crypto and blockchain regulations were introduced last year in multiple jurisdictions, the rules around some crypto coins and whether they fall under the security or commodity categories are still unclear and debatable.

Retail and Institutional Adoption Are Both Essential for the Crypto and Blockchain Space

Even though in different ways, we can say that retail and institutional adoption has the same importance for the crypto market. Institutional adoption brings in significant capital for crypto and blockchain businesses while adding an extra layer of assurance to the whole space. If reputable companies and financial institutions are willing to put their money in this market, it simply means that the market is scoring high on its tests.

On the other hand, retail adoption is essential for the growth of businesses within the space. The increased demand will drive the companies to expand their services which will eventually lead to more revenue. This elevated revenue will convince more investors to enter the space, bringing more retail adoption with them and creating a positive cycle for the whole system of applications and users.

As we can see, the blockchain and crypto space needs both retail and institutional adoption to boost its reach further to achieve mass adoption. And with the growing institutional investments, we can say that the positive cycle has already started.

© Copyright 2024 DIFX Limited All rights reserved