What Does Institutional Adoption Of Crypto Mean For 2021 And Beyond?
By Landon Manning
Toward the end of 2020, bitcoin — the world’s preeminent cryptocurrency and a consistent indicator of the larger crypto market — has shot up in value to reach all-time highs and is staying there.
A large factor in this trend has been a marked increase in institutional investment, from legacy financial influencers and mainstream institutions, a change that has benefitted not only Bitcoin, but the entire wider crypto industry as well.
A Wave Of Institutional Adoption
Various financial institutions, both on Wall Street and in international governments, have had a very complicated relationship with cryptocurrency as a whole since Bitcoin first crashed onto the world stage.
However, the success of Bitcoin is measurable in ways that naysayers simply cannot discredit. Just to name one example, the value of gold is currently at its highest since 1973, when its price was formally severed from a direct exchange rate to the U.S. dollar. And yet, despite these huge gains, analysts at JP Morgan have claimed that the resurgence of crypto has scored a crippling blow to the overall role of gold in finance, a blow that will reverberate across decades.
Why is this? These analysts have claimed that institutional investors have had an intimate tie to the trade of gold for as long as international finance has existed, but they’re only just beginning to scratch the surface of the world of crypto.
Now that Bitcoin is winning these institutions over, their data shows that “The Grayscale Bitcoin Trust, a listed security popular with institutions, has seen inflows of almost $2 billion since October, compared with outflows of $7 billion for exchange-traded funds backed by gold,” Bloomberg reported. In other words, crypto is interesting enough that it’s stealing the thunder from some of the most foundational commodities known to finance.
This is just one example of the new life that has come into the world of cryptocurrency: Bloomberg has also reported that a great number of investment banks have gobbled up bitcoin as fast as they could, and the list of billionaires and other prominent tech figures to endorse the crypto asset has grown longer and longer recently. Furthermore, this new relationship is proving to be deeper than a simple treatment of crypto like any other stock option to gamble on, as a great number of corporations are developing sophisticated tools to manage their own actions in the space.
What Could The Mean For The Future?
This new adoption is resulting in gains for all sorts of crypto assets, helping break barriers all across the board.
For example, in mid-2019, signals from the Indian government of an intent to ban cryptocurrency were so strong that a finance minister for the country had to specifically deny that the country had already banned it. And yet, as the price of Bitcoin started to rise in October, cash suddenly flooded into the nation’s crypto scene. Now the CEOs of the four largest crypto exchanges are claiming large increases in trade volumes and users growth.
Various players are now chomping at the bit to make wild proclamations about the future of crypto, predicting that Bitcoin could go up in value by 25 times over the next several years. This is a very chaotic space, and it can be easy to disregard predictions like this. But what’s less easy to ignore is the fact that developer activity has been going up massively among many crypto assets, not only Bitcoin or even the highest performing altcoins.
Things like increasing institutional adoption, growth in emerging global markets and booming developer activity all suggest that the rise of crypto assets is having fundamental impact on the near future. It appears safe to say that 2021 will mark additional gains — financial, technical or otherwise — for the cryptocurrency space.