Analyst predicts surge of institutional investment in cryptocurrency
Financial experts at H.C. Wainwright & Co. are convinced that major institutional investors are just beginning to dip their toes into the world of crypto ETFs, highlighting the urgent need for regulatory guidelines in the sector.
Referencing the recent Coinbase State of Crypto Summit, these analysts conveyed a sense of optimism towards the overall crypto industry. They firmly believe that a positive trend is emerging in the crypto ecosystem, with a surge of capital on the horizon.
The summit, held in New York City, shed light on the growing interest from institutional investors in crypto, resulting in a bullish outlook on Bitcoin and digital assets. Key discussions at the event revolved around the successful launch of spot Bitcoin (BTC) ETFs, the advancements in payment systems and stablecoins, the tokenization of tangible assets, and the necessity for improved regulatory clarity in the United States.
Institutional players are only just beginning to explore investment opportunities
With the introduction of spot BTC ETFs, there has been a noticeable uptick in BTC and other digital asset values, attracting a new wave of investors.
Spot BTC ETFs have attracted over $15 billion in net inflows and currently manage around $63.5 billion in assets, establishing them as the fastest-growing ETF category in history. Approximately 90% of these assets are under the custody of Coinbase.
Despite retail investors accounting for about 80% of these inflows, major brokerage firms and investment advisors are still conducting thorough assessments, hinting at potential growth and even more substantial inflows as these products gain wider acceptance.
The analysts predicted, “Anticipate a surge of institutional inflows once major wealth platforms approve BTC ETFs.”
Furthermore, it is projected that over $70 trillion in wealth will transition to younger demographics – millennials and Generation Z – who are more inclined towards crypto investments compared to older generations.
Digitized assets
While traditional financial systems tend to be sluggish in adapting to change, the broader crypto sphere is progressing towards practical applications in the real world, transcending its role as a mere asset class or store of value.
The report mentioned, “Stablecoins facilitated $10 trillion in total volume in 2023, surpassing the transaction volume of the world’s second-largest payment network, Mastercard. Additionally, a recent survey by Coinbase revealed that 56% of Fortune 500 companies are actively engaged in blockchain projects.”
BlackRock, the largest asset management firm globally, has tokenized tangible assets on the Ethereum blockchain. The BlackRock USD Institutional Digital Liquidity Fund boasts $382 million in assets under management.
Other financial analysts predict that the global Exchange-Traded Fund (ETF) market could reach $35 trillion within the next decade, encompassing crypto investments as well.
Regulatory transparency
A well-defined regulatory framework could prove advantageous for the crypto industry and encourage institutional investors to participate. The bipartisan endorsement of the Financial Innovation and Technology for the 21st Century Act (FIT21) in the House of Representatives indicates a more supportive regulatory landscape for crypto.
Taking all these factors into consideration, the H.C. Wainwright analysts are optimistic that clear and well-thought-out regulations in the U.S. will have a positive impact on crypto prices and trading volumes, attracting institutional investors who have been hesitant to join in due to regulatory uncertainties.
They reiterated their “Buy” recommendation for Coinbase Global, Inc. (COIN) with a target price of $315 per share. Currently, COIN is trading at $238.18.
