eToro has released a report stating that there are still many hindrances in the adoption of Crypto by institutional investors.
Aite Group, an advisory firm along with eToro, has revealed a new report which stated that there are still many hindrances in the adoption of Crypto by institutional investors. The report highlights almost 25 interviews of the institutional market participants who showed their interest in the crypto but lacked due to unregulated laws and security.
The report mentions that the crypto market could reach a $2trillion market capitalization if more institutional investors join the market amid favourable conditions. These firms will happily adopt crypto if there were less regulatory uncertainty, developed market infrastructure and less risk surrounding security.
Tomer Niv, eToro, Head, Business Development stated that 2020 saw many institutional investors joining the crypto market. Banks and traditional asset managers began to show interest in the market and either invested in crypto or seriously considered it doing. Most of them were keen to invest in Bitcoin as an inflation hedge.
Key Factors
The other key factors mentioned in the report that could take institutional investors to the crypto space are the following:
Standardised Global Regulatory Regime along with reliable market infrastructure will create confidence among the investors. The features will provide assurances to institutions who are concerned about how crypto will be regulated in their jurisdiction.
Secondly, technological complexity is another barrier to overcome. Some participants expressed concerns over the risks of storing private keys but recognised the benefits of crypto cold storage. Niv is optimistic to see that the next phase of the crypto industry’s evolution is on its way as more institutions will participate in the crypto. He also said that there is much to do in respect to market infrastructure point of view to make this group of investors comfortable joining the crypto.
Not to forget that institutional players played a very pivotal role in the crypto market in 2020. Micro Strategy, a business intelligence company, had invested $425 million Bitcoin (BTC) bet and subsequent crypto purchases last year. Digital asset manager, Grayscale too had invested heavily and constantly increasing its assets under management led BTC to all-time high prices.
The rising rally for many tokens resulted in the total cryptocurrency market capitalization breaking $1 trillion for the first time in January 2021.
