Institutional Crypto Adoption: A Long-term Game Plan

Latest News

AABB_wallet

The crypto market threw a giant comeback despite the establishment of the wild saying, “The crypto market is not for the faint-hearted.” This resulted from the recent market dip around mid-September. Meanwhile, this unpredictability does not stop institutional investors from buying the dip. This indicates that there are increasing efforts to establish institutional crypto adoption.

An example of this demand is what we witnessed with Morgan Stanley doubling its total investment in Grayscale Bitcoin Trust (GBTC). This was revealed due to its report to the U.S SEC during the last four days of September.

Spiked Institutional Demand for Crypto Involvement

Cointelegraph reported its attempt to have a wider view into how institutional adoption is creating its pace and getting exposed to the crypto world. As a result, they contacted Luuk Strijers, CCO of Deribit. He mentioned how big financial service providers like Morgan Stanley and Goldman Sachs present their clients with various digital assets. Luuk added that,

“We don’t see them becoming active on offshore derivatives platforms yet. We do, however, see the tier-two firms in size, asset managers and hedge funds becoming more and more active either actively investing/trading or alternatively hedging their VC investments.”

While establishing his stance, he mentioned that his company engages about one-fifth of its options volume in over-the-counter (OTC) block transactions. Meanwhile, the range used to be between 5% and 10%. Then, he explained how the transaction size indicates institutional involvement and how a single block execution is better than multiple ones.

The Long-term Game Plan

In the vein of comparing how retail investors behave to institutional investors, Elena Sinelnikova—CEO and co-founder of Metis—revealed that retails investors are a friend to the market during the bull runs. Meanwhile, institutional investors understand the long-term game. As a result, they recognize that the consolidation periods are the best times to obtain more digital assets for a long-term profit.

The crypto market has experienced different downward movements. The chart is either spiraling down or at a standstill. While this may repeat itself as market cycles over a period, institutional investors leverage these moments to stack their bags and look forward to another bull run. However, they are well aware that the crypto market is unpredictable.

To caution institutional crypto engagement, she mentioned that different factors contribute to different market results. Thus, she advised that investors should know if the altcoins are responsible for another bull run or Bitcoin is the major drive. She believes conducting this critical study is instrumental to placing a good trade call.

On the other end, Elena’s posit received likable support from Douglas Horn, chief architect of Telos—a scalable blockchain network. Douglas mentioned that institutional investors are more like market cruisers that require enormous energy and time to get started. But it is almost impossible to stop their movements once they begin.

He said,

“Now that they have made the decision to get into crypto, they are not going to be dissuaded by some temporary volatility. If anything, they are going to be less flappable about accumulating crypto during downturns. By the time these investors bought their first Bitcoin, they had surely spent years assessing and strategizing their entry and objectives. They operate very differently than typical crypto investors and traders.”

In his final statement, he mentioned that firms such as MicroStrategy are becoming a benchmark for other institutional investors to follow in the digital assets involvement process. He noted that new investors would do little to while assessing the viability of their long-term market investment.

Opinions Can Be Different

Despite the increasing institutional crypto adoption over some months, some institutional investors differ in opinions. They hold a very different view and are choosing the precautionary grounds of crypto involvement. One other factor contributing to this stall is the possible regulatory actions that may manifest in this industry.

In an attempt to get a clear view of a possible different opinion, Cointelegraph got a statement from Philip Gunwhy, CMO of Blockasset—an NFT ecosystem. He replied while establishing his belief that,

“The potential buyers of Bitcoin are not a coordinated effort by these institutional investors, and as such, one cannot tell with certainty the buying patterns of these investors, except when announced. While Morgan Stanley recently doubled down on its Bitcoin investments, many institutional investors are choosing the option of venture capital funding, injecting capital in companies offering Bitcoin-related services.”

His statement revealed that the public is not often aware of these institutional except when being announced. On the other hand, some investors are not directly investing in the crypto market. Instead, they are investing in crypto-related startups.

Meanwhile, another opinion holds that cryptocurrency venture capitalists are funding the blockchain space via crypto. Although it is more scalable than the volatile, unpredictable cryptocurrency market. Wes Levitt—Theta Head of Strategy mentioned that,

“It could be that interest has waned somewhat in direct exposure to BTC/ETH with the May crash no doubt spooking many traditional investors, but according to reports, institutional flows are still net positive for the month of September. As always, the reports of crypto’s death are greatly exaggerated.”

This explains that institutional investors are engaging the crypto market despite the overhyped reports of a crypto downward spiral. Still, they may be investing in other coins with other use cases instead of Bitcoin or Ethereum.

However, there is a lot to expect from the crypto industry because regulations will affect new market rules, and participants will explore more.

How Future Institutional Crypto Adoption Appears

Who wouldn’t want to know how institutional crypto adoption will take shape in the crypto market? No one. To understand how it may play out, Joshua Frank—CEO and co-founder of TheTIE—mentioned to Cointelegraph that they are receiving strong demand from traditional firms.

He revealed that different asset managers, hedge funds, and trading firms are pumping billions of dollars into the crypto market and making their first crypto trades. While this may not be convincing enough, he mentioned that some background works are taking place, which the public is unaware of.

He revealed how funds graduated to big trades after using partners’ funds to conduct a cash-and-carry Bitcoin trade. In his revelation, he stated that some top 50 largest hedge funds are pumping enough into crypto adoption while recruiting crypto teams.

A recent survey revealed that traditional financial service providers keep seeking advantageous ways to involve in the digital asset world. A global report revealed how about 62% of institutional investors worldwide are initiating plans to enter the crypto market in twelve months.

The institutional adoption may want to fall back to observe how regulations will affect the crypto market. But this won’t stop the trending adoption from institutional investors. This adoption will have a massive impact on the market, and an unexpected market shift may exist due to institutional decisions. Above all, it would be great for crypto enthusiasts to see how this plays out.

Ridwan is a digital nomad. He is an experienced crypto writer that writes across blockchain and cryptocurrency topics. He buries his head in books' leaves, playing games and networking if he is not writing. He believes you will be happy if you appreciate the little things that matter while working for more.