The entry of institutional investors into the market of cryptocurrencies has been a significant development that has brought both excitement and speculation to the crypto market. Institutional participation, particularly in Bitcoin, has the potential to reshape the crypto landscape in several ways. So in this article, we will discuss how exactly institutional investment in crypto may change this financial sector and who are institutional investors.
Institutions Buying Crypto
Let’s first discuss, who institutional investors are. That may be financial corporations, banks, or funds that use crypto assets to meet the requirements of their clients or just allocate a part of funds to crypto. That may be technology companies, family firms, or just wealthy people, celebrities, etc. They look for a reliable institutional crypto trading platform to invest in crypto safely and receive all the needed tools.
Here is a table to see what institutions own BTC:
| The name of the company | The amount of bitcoins held |
| Tesla Inc. | 10500 BTC |
| Coinbase Global Inc. | 10500 BTC |
| Galaxy Digital Holdings | 12545 BTC |
| Marathon Digital Holdings | 12964 BTC |
| MicroStrategy Inc. | 152800 BTC |
The Biggest Institutional BTC Holders
Let’s talk about banks investing in crypto. In 2021, during the peak of the crypto bull run, 55% of the leading 100 banks had invested blockchain sphere, including crypto assets and blockchain-focused enterprises. As the bull run subsided and the crypto market entered a bearish phase, there was a widespread sell-off of crypto assets. It resulted in declining prices and reduced investor confidence within the sector. Nevertheless, this setback did not deter the banking industry.
Banks turned their focus on individual blockchain projects, and from 2021 to 2022, 23 banks are known for investing substantial amounts in crypto. The following statistics are based on an examination of fundraising rounds conducted by banks for various blockchain startups and companies:
| The name of the bank | Funds raised |
| Morgan Stanley | $1100M |
| Goldman Sachs | $698M |
| BNY Mellon | $690M |
| Commonwealth Bank of Australia | $421M |
| Citigroup | $215M |
Table “Statistics on Fundraising Rounds Conducted by Banks for Different Blockchain Startups”
How Will Crypto Institutional Adoption Impact Crypto?
Here is what can change with the increasing adoption of crypto by financial institutions and companies:
- Institutional investors often deal with substantial capital. Their entry into the market can significantly boost liquidity, making it easier for traders to buy and sell cryptos.
- As institutions embrace cryptocurrencies, the market becomes more mature and less speculative.
- Institutional investors typically seek regulatory clarity and compliance, which can influence governments to establish clear guidelines for the crypto industry. For example, crypto trading platforms implement AML checks and KYC verification to ensure the safety of their clients and also make sure they are not dealing with any fraud schemes.
- To cater to institutional demand, financial products like Bitcoin futures, ETFs, and custody solutions have emerged. These products provide more opportunities for institutions to participate, further legitimizing the crypto market.
- As institutions enter the crypto space, bridges between traditional finance and the crypto market are being built.
FAQs
What crypto are institutional investors buying?
Retail investors are wholeheartedly adopting cryptocurrencies in the latter half of this year. Simultaneously, institutional investors are keenly observing the swift ascent of a multitude of digital currencies, spanning from Bitcoin and Ethereum to Litecoin and Chainlink, among the vast array of options available.
How much of Bitcoin is institutional?
In June, institutions, a diverse group encompassing entities such as ETFs like Canada’s VanEck and sovereign governments like El Salvador, possess 8.63% of the total amount of bitcoins that will ever come into existence.
How do institutions invest in Bitcoin?
Institutions find the most straightforward approach to crypto investment through holding cryptocurrencies on their balance sheets. This action is essentially their way of expressing faith in the enduring value of these assets.
Wrap-Up
The influx of institutional investors into Bitcoin and the broader crypto market carries the potential to bring stability, legitimacy, and acceptance to the space. However, it also presents new dynamics and challenges that will continue to shape the future of cryptocurrencies. The interaction between institutional and retail investors, along with evolving regulatory landscapes, will be crucial factors in determining the long-term impact of institutional involvement in the crypto sector.
