Unlike the stock market which is dominated by institutional investors, the crypto-market is governed by individual investors.
Cryptocurrency exchanges are currently overwhelmed by individual investors. Binance, a popular exchange for cryptocurrencies, revealed that 250,000 new users registered to their service in a single day. Kraken has 50,000 new accounts made daily, having a volume of 10,000 new support tickets every day.
Exchanges including Binance, Bitfinex and Cex.io have temporarily interrupted new account registrations to update their technologies and prepare their platforms for the great number of individual investors that will overload the market.
“In a sign of how more conservative firms are keeping their distance, the CFTC data show near-zero trading in Cboe’s Bitcoin futures by banks and asset managers”, wrote The Wall Street Journal.
Institutional investors are coming
There are countless predictions regarding a crypto- bubble. When the incredibly volatile prices of the crypto –market begin to shift, it starts a wave of opinions that the bubble will burst and the movement will die. During the flash crash that cryptocurrencies experienced before Christmas, there was a huge wave of posts declaring most cryptos dead. But most prices recovered in a day.
In spite of such crashes, the crypto movement is just beginning.
Money from institutional investors are expected to come, and when that happens, the values will see another significant increase.
Even the avid critic and skeptic, J.P. Morgan CEO Jamie Dimon has recently regretted saying bitcoin was a fraud. He went on to say that he supports cryptocurrencies that represent fiat currencies like dollars or yen.
Ripple has been reported to have more than 100 clients that come from the banking industry using its XRP token. On January 11th, MoneyGram employed Ripple’s XRP token as a way of making the payment process faster. Ripple’s price shot up 25% after the news before falling later that day.
Opportunities for institutional investment
As the uses of blockchain become more prevalent, an increase in institutional investments is expected for cryptocurrency markets.
It will be individual interest that will generate institutional investments, which will definitely impact the value of virtual assets.
The bitcoin futures contracts run by the CME and Cboe groups represent rapidly increasing opportunities for institutions to invest. They might indicate that the crypto-ETF funds may soon be available for investors. According to Morgan Stanley’s estimates, hedge funds invested over $2 billion in crypto assets last year.
As digital currencies continue to gain popularity and acceptance from the public, they have proved they are able to withstand and recover from unfortunate market scenarios.
Technology is developing at an alarming speed, many current features and safeguards of the traditional investment markets are starting to be noticeably present in crypto-markets as well.
The current crypto market capitalization is enormous, but it has yet to reach its gargantuan potential. Cryptocurrencies are just beginning to outgrow their image of being an unsafe investment. However, the real growth factor will be institutional investments, which will be induced by individual investors who want to get into crypto markets via institutional platforms and by investors that can’t resist the possibility of considerable profits.