Institutions will continue to invest in crypto… on one condition

According to a study, institutional investors would still be motivated to put their money into crypto if it suited their idea better.

Institutions still have faith in crypto

Inevitably, the various profiles that make up the realm of the cryptosphere continue to change as the crises unfold. While individuals, sometimes victims of the crypto winter, sometimes the FTX bankruptcy, are walking the tightrope, the same is not true for institutional investors. On the contrary, the latter would have turned into a privileged public in this sector.

According to one inquiry produced by Coinbase, the crisis would in no way drive away this category of investors. Even, the latter would have intensified their investments during 2022, despite a bear market.

62% of investors currently invest in cryptography increased their allowances in the last 12 months (compared to 12% who reduced their allowances). This is evidence that institutional investors have continued to take a long-term view of the asset class, even as prices have fallen.

Excerpt from Coinbase’s survey of institutional investors

Additionally, 58% of respondents said they want to increase their crypto investments in the next 3 years. This phenomenon is justified by Coinbase, which, unlike most retail investors, invokes a long-term vision of the crypto market. Thus, despite the crisis, institutions are counting on an improvement in the coming years, while asserting that digital assets will last over time. The perspective of a 4-year cycle, in the middle of which we would be currently and which should result in a rally, may also encourage them to invest their money.

However, the industry needs to change

If the sample Coinbase based its investigation on bears out pour in in crypto to enable the development of new technologies while earning additional returns from the currency’s appreciation over time, his loyalty to the industry remains limited for now. Indeed, many fears still remain for institutions, including volatility and price manipulation.

Source: Coinbase Survey

For the improvement of the situation, a condition is required from the interviewees. Nearly 52% of them are concerned about the lack of regulations and require them to be effectively implemented. Although some gray areas are still to be ironed out, especially in relation to NFTs which are not covered by the abridgement of laws such as Mikathe industry may see new stakeholders join the ranks of investors after the framework is adopted.

Once again, when they think about the turmoil in the market for cryptography, investors use it to reinforce their view that regulatory clarity is needed. Nearly half (47%) of investors see events such as Terra Luna’s crash and 3AC’s bankruptcy as a call to action for policymakers to create a level playing field and enact much-needed regulations.

Excerpt from Coinbase’s survey of institutional investors

Finally, the institutions’ preferred partners would be crypto companies that hold a license, demonstrating transparency and a good risk management strategy. By meeting their initial selection criteria, they can benefit from more funding.

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