The first companies that paid attention to cryptocurrencies were MicroStrategy – a mobile software and cloud devices company, and Square – a payment processor company, followed by Tesla. These company’s investments in Bitcoin created a buzz and once and forever dispelled doubts that crypto is only for retail traders or tech geeks. Over time, financial corporations and banks started to integrate crypto (Chase, U.S. Bank, Mercury, and others).
Active participation of financial and tech companies in the crypto sector stimulated the development of institutional services such as trading and analytic tools, token listing services, reporting tools, custody, and compliance. Let’s discuss what assets institutional investors in cryptocurrency focus on and what is the future of this sector.
What Assets Do Crypto Institutional Investors Choose?
Bitcoin is the leader among companies who consider engaging in the crypto sector in one way or another. Ethereum comes second. The most common ways for institutions to use crypto are:
- Holding to capitalize in the future.
- Trading – registering on an institutional crypto trading platform allows companies to buy and sell assets in large amounts and gain income.
- Becoming a crypto exchange market maker – financial entities may partner with trading platforms and become market makers. That means, day-by-day placing buy and sell orders to gain profits from every trade fulfilled.
Prospects and the Future of Institutional Crypto Investments
The crypto market is getting mature with the development of institutional crypto custody services and compliance tools. However, the key drivers for the mass adoption of digital assets will be the recognition of crypto as legitimate assets and high returns from investments.
The future of institutional crypto investments looks promising since such giants as MicroStrategy and Tesla stay in. To attract more participants, it takes to develop a clearer regulation framework. This would help increase future investors’ confidence and more of them will join the market.
DeFi platforms stand as one of the most promising directions for institutions, allowing for loans and insurance with no middlemen.
Institutions are going to play a central role in wider crypto adoption and market maturity in the next few years. With financial and tech giants joining the crypto sector, it will become more stable, liquid, trusted, and legitimate. This, in turn, will transform traditional finance in the long run.