Despite the ongoing crypto bear market, institutions continue to institutions accumulating crypto in 2022 cryptocurrencies. According to a recent survey by Fidelity Digital Assets, 58% of institutional investors are now holding cryptocurrencies, up from 52% a year ago. And 78% of respondents said they plan to invest in crypto in the future.
So why are institutions so bullish on crypto, even in the face of short-term volatility?
Reasons for institutional adoption of crypto
There are a number of reasons why institutions are increasingly investing in crypto. Some of the most common reasons include:
- Long-term potential: Many institutional investors believe that cryptocurrencies have the potential to generate significant returns over the long term. This is due to a number of factors, including the limited supply of many cryptocurrencies, the growing adoption of blockchain technology, and the potential for crypto to disrupt traditional financial markets.
- Diversification: Cryptocurrencies can help institutional investors to diversify their portfolios and reduce their overall risk. This is because cryptocurrencies are uncorrelated with traditional asset classes such as stocks and bonds.
- New investment opportunities: Cryptocurrencies offer institutional investors access to new investment opportunities that are not available in traditional markets. For example, institutional investors can invest in crypto startups, participate in decentralized finance (DeFi) protocols, and earn yield on their crypto holdings.
Institutional investment in crypto in 2022
Institutional investment in crypto has accelerated in 2022, despite the bear market. This is evident in the growing number of institutional-grade crypto investment products and services that are being launched. For example, in March 2022, Fidelity Digital Assets launched a new service that allows institutional investors to trade Bitcoin and Ethereum. And in June 2022, Coinbase launched a new platform for institutional investors called Coinbase Prime.
The growing institutional investment in crypto is also being driven by the increasing adoption of blockchain technology by businesses and governments around the world. For example, in April 2022, El Salvador became the first country in the world to adopt Bitcoin as legal tender. And in June 2022, the United States Federal Reserve announced that it is exploring the possibility of launching a central bank digital currency (CBDC).
Fidelity researcher’s perspective on institutional adoption of crypto
Chris Kuiper, the Head of Research at Fidelity Digital Assets, believes that the institutional adoption of crypto is still in its early stages. However, he is optimistic that institutional investment in crypto will continue to grow in the coming years.
In a recent interview with Cointelegraph, Kuiper said: “We are still very early in the institutional adoption cycle. But we are seeing a lot of interest from institutional investors, and we are seeing a lot of products and services coming to market to support their investment objectives.”
The institutional adoption of crypto is a major trend that is likely to continue in the coming years. Institutions are attracted to cryptocurrencies for a number of reasons, including their long-term potential, diversification benefits, and access to new investment opportunities.
Fidelity researcher Chris Kuiper believes that the institutional adoption of crypto is still in its early stages, but he is optimistic about the future of crypto adoption by institutions.