The crypto space has grown by leaps and bounds. What was once an obscure payments network has become a force to be reckoned with — not just in the financial industry, but also in other sectors.
Recent research published by Fidelity Investments reveals that:
“Seventy-two percent of the institutional crypto investment firms are keen on investing in products that hold digital assets, while 57% choose to directly buy crypto assets.”
Crypto has also become an appealing prospect for institutional investors across diverse verticals. According to the Fidelity report, approximately 22% of institutional investors are already investing in digital assets, and many more are on the verge of getting into the crypto ecosystem. Four out of ten institutions report being open to crypto investments in the coming years.
Institutionalization of Crypto Assets
The majority of big banks have steered clear of blockchain and crypto investments up until recently. However, after witnessing the growth in these spaces, some financial institutions have begun jumping on the crypto bandwagon.
This November 2018 KPMG report boldly argued that cryptocurrency growth is mainly limited due to the market’s highly volatile nature. The report also emphasized that institutional money can go a long way toward stabilizing erratic price fluctuations and toward market maturation.
“Institutionalization is the necessary next step for crypto and is required to build trust, facilitate scale, increase accessibility, and drive growth.” — KPMG’s Institutionalization of Cryptoassets report
Key players from various industries have embraced crypto, which has led to major banks and venture capital firms dipping their toes into the space.
Institutional Crypto Investments Rejuvenate the Space
High profile firms like Goldman-Sachs and Morgan Stanley have recently invested in digital assets. This notion of bulge bracket firms entering the crypto space has resulted in some exciting developments in investment behavior. Recently, leading U.S. VC firm Andreessen Horowitz created a $350 million venture fund to invest in crypto assets. Other VC firms are expected to follow the Andreessen Horowitz example.
Chris Dixon, General Partner at a16z, said:
“We plan to invest consistently over time, regardless of market conditions. If there is another ‘crypto winter,’ we’ll keep investing aggressively.”
So far, Andreessen Horowitz has invested in notable startups such as Coinbase, Ripple, and Ethereum, among others. Here is a full portfolio of the company’s blockchain and crypto assets.
Conclusion
Several prominent financial institutions have already begun building their crypto investment portfolios. As more and more institutional players get involved in the space, market confidence will continue to increase, which could be a catalyst for mass adoption.
The crypto market has seen overwhelming growth over the past decade, but for the market to reach its full potential, institutional engagement is essential.
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