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The cryptocurrency market has been boosted by the increasing influence of institutional investors.
These ‘smart money’ players bring substantial capital, in-depth research and strategic approaches, and their interest is reshaping the future of Bitcoin and blockchain technology.
Institutional adoption is more than a trend, it signifies the market’s maturity and potential.
Institutional demand increases stability and credibility in the space, signalling confidence in the long-term viability of digital assets, which will be crucial for broader adoption and growth.
Retail vs institutions
The difference between retail and institutional investors is profound.
While retail investors often rely on emotion and speculation, institutions bring discipline, deep analysis and sophisticated strategies, significantly impacting crypto prices and demonstrating growing acceptance of digital assets.
Crypto ETFs: A gateway for institutional investment
This year has been pivotal for institutional adoption of crypto, driven by the approval and launch of several spot Bitcoin ETFs in the United States.
While retail investors have long accessed cryptocurrencies like Bitcoin through exchanges, institutions now have a more traditional and scalable option to invest in large quantities of crypto.
$1 billion in 30 minutes of trade!
Since the January 2024 launch of Bitcoin ETFs, the market has seen a huge $17 billion in net inflows, despite considerable outflows of the Grayscale Bitcoin Trust (GBTC) ETF (which we’ll mention again shortly).
The success of Bitcoin ETFs managed by giants including BlackRock, Fidelity, and Grayscale was evident from the outset, with these products collectively exceeding $1 billion of net flows in the first 30 minutes of trading.
Major US and global financial institutions, including Goldman Sachs, Wells Fargo, JP Morgan and Morgan Stanley, now hold significant positions in Bitcoin ETFs – a remarkable shift given the previous scepticism expressed by figures such as JP Morgan CEO Jamie Dimon, who claimed that if he was in government he’d shut down Bitcoin!
Of those, Goldman Sachs appears to be the most bullish on Bitcoin, having acquired $418 million of BTC ETFs in Q2 this year.
Did you know?
British multinational bank Standard Chartered made a bold forecast, predicting that Bitcoin could reach a cycle high of US$250,000 in 2025 – which would represent an almost 400% increase from current prices.
What about closer to home?
Bitcoin ETFs have also gained momentum in Australia. The Monochrome ETF which went live in June surpassed 100 BTC under management (approximately A$10 million), showcasing the growing acceptance of Bitcoin as a legitimate investment vehicle across the globe.
Ethereum ETFs faring differently
Following the success of the Bitcoin ETFs, several Ethereum ETFs were approved in the US, despite expectations they’d be rejected.
However, they’ve not had the start that some would have wanted, with Ethereum ETFs experiencing net outflows of $420 million.
This occurred because the Grayscale Ethereum fund (ETHE) was converted to an ETF. Investors were likely selling their units to switch to other ETFs with lower fees.
A similar trend occurred with the Grayscale BTC ETF (GBTC), although selling has slowed over time. A similar pattern is playing out with Ethereum.
The Emergence of New ETFs
The cryptocurrency market continues to expand, with new ETFs on the horizon. Notably, there is growing interest in Solana, a blockchain platform that has made significant strides in 2023-2024.
Solana has even surpassed Ethereum in a number of metrics, including daily activity addresses, an indicator of activity and usage of the network.
VanEck and 21Shares have filed applications for a spot Solana ETF in the US, following the recent approval of a similar product in Brazil.
The success of a Solana ETF could signal broader acceptance of alternative coins, or, as they’re collectively known, ‘Altcoins’, further diversifying the market and providing institutional investors with more options.
Big players launching Web3 & blockchain initiatives
The trend of institutional adoption extends beyond direct investments in cryptocurrencies or ETFs.
According to a report from June 2024, 56% of Fortune 500 executives stated their companies were developing blockchain-based initiatives.
Some notable brands that have already begun exploring crypto, Web3 or blockchain initiatives include:
- Nike: Launched an NFT marketplace, named .SWOOSH;
- Microsoft: Recently partnered with blockchain platform Aptos to merge AI with Web3 technologies;
- Visa: Is launching crypto-related payment solutions;
- PayPal: Is enabling crypto transactions on its payment network and launched its own stablecoin, PYUSD;
- ANZ: Has collaborated with Chainlink (LINK) to securely transfer ANZ-issued stablecoins cross-chain to purchase nature-based assets; and,
- Telegram: Has an integration with The Open Network (TON), to simplify the process of accessing and managing cryptocurrencies.
This broader adoption of blockchain technology is a testament to its potential to revolutionise various industries.
*Handy Tip
When discussing the initiatives, we refer to crypto, Web3 and blockchain in the same context. Simply put, blockchain is the underlying technology, crypto represents the currency and investment vehicle, and Web3 embodies the broader concept of decentralised technology.
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