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Institutionals and the crypto market: where do we go from here?

Lately there has been a lot of speculation in the market on whether the interest of institutional investors in Bitcoin would cause its price to continue moving upwards in the long term. The other side of this theory is that if institutionals were to lose their interest, Bitcoin would be in danger of crashing down, like it happened with the bubble back in 2018. 

When considering this matter, I believe it important to highlight that, between 2018 and today, Bitcoin has matured a lot as an asset. Across the entire 2020 we have observed how cryptocurrencies were becoming progressively more mainstream - many countries and non-crypto businesses involved themselves with this market, bringing forth advancement in regulation and infrastructure so that traditional finance could adapt and work more efficiently with crypto and blockchain. 

In 2020 CEX.IO exchange has witnessed its corporate client base double. By comparison, in 2019 the maximum share of corporate clients' turnover on our platform was only 22%, whereas last year it reached 51.3% at certain points. By now, 60-80% of such clients are constantly present on our platform and conduct trading operations on a regular basis.

Many eyes are turning to Bitcoin as a viable asset to put their money into and this has helped to lower the risks related to the volatility of crypto. As a result the trust towards this asset class continues to go up for the retail investors as well.

Despite many people thinking that the institutionals will be the deciding factor of whether a new crypto boom takes place, I do not think this is going to be the case. Institutional investors and their influence will help the cryptocurrency market to become more stable and efficient. The effect this will have on the absolute price change is only secondary.

In terms of what the future will be like for crypto - I think by now it is safe to assume that this market will continue to solidify its presence in the field of finance in 2021 and beyond. Institutionals, in particular, aim for long-term positions, which will only continue to add to the safety net that’s protecting Bitcoin from crashing.

 

 

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