We’ve been talking a lot about crypto recently and there’s been so much news, so get ready for this because we have more! Now it’s a well-known fact that over the past few years Bitcoin and other cryptocurrencies have been largely backed by retail investors, meaning everyday folks like me and you, and generally ignored by bigger institutional investors, such as banks, credit unions, insurance companies, pension funds, Hedge Funds, you get the point … they have a lot of money and in turn, a lot of power to move any given investment. So why have institutional investors avoided cryptocurrency and will this change? A few reasons institutional investors have avoided crypto are crypto being too risky, being too small of a sector relative to others, and a lack of tangibility.
This reasoning was one year ago, but have times really changed? Well, crypto has seen a massive spike not only in its stock price but also its slow but true acceptance into the real world. With companies like PayPal, Tesla, and more adopting crypto as a legitimate means of payment, cryptos “lack of tangibility” relative to currencies in the status-quo may become less relevant. With Bitcoin seeing the potential in its real-life application, institutional investors may be stepping in. In fact, an analysis of the crypto market from Citi Bank reported that there had been a major change in bitcoin from “institutional investors as they search for higher returns and alternative assets.” All in all, though nothing is confirmed because the markets are unpredictable. That’s why Citi analysts concluded, “There are a host of risks and obstacles that stand in the way of Bitcoin progress. But weighing these potential hurdles against the opportunities leads to the conclusion that Bitcoin is at a tipping point.”
Which way do you think Bitcoin will fall on this “tipping point”? And will institutional investors become more heavily involved with Bitcoin and other cryptocurrencies going into the future?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.