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David Drake

May 8, 2018 Article

Why Institutional Investment in Cryptocurrency Market is a Game Changer

Cryptocurrency is an idea whose time has come and cannot be ignored. However, many traders, investors and spectators are wondering if the crypto market will recover its lost ground following the big drop in crypto prices and market cap during the first quarter of 2018.

The entry of institutional investors into the crypto market is definitely a new twist and will speed up the recovery of this evolving and transformative ecosystem. With support from big institutional investors Soros Fund Management, Venrock, and crown prince of Liechtenstein, we expect a quick turnaround of cryptocurrency market.

Increased Credibility

Despite challenges like banning of crypto-related ads by tech giants, probing and suspension of crypto projects, and fraudulent crypto schemes, we have seen a boost in the adoption of cryptocurrencies.

There are many revolutionary applications of cryptocurrency and blockchain technology across sectors. Some of big companies already using cryptocurrencies and blockchain technology include Microsoft, Virgin Galactic, IBM, Walmart, PayPal, British Airways, Shopify and several financial institutions.

These moves have increased adoption and attracted institutional investors. With their large financial capability and business networks, the entry of institutional investment in the cryptomarket will attract other global players and boost its credibility, hence reducing volatility in the cryptocurrency market.

Denis Farnosov, Founder CEO & founder of
AlfaToken says, “As traditional money managers enter the sector they bring credibility, track record and best practices for managing volatility. The cryptocurrency and blockchain market is young and evolving. A larger number of institutional and venture capital investors participating is encouraging for the sector. This can result in greater interest, media attention and confidence which is key to reducing volatility.”

Crypto Legitimacy

Increased awareness of cryptocurrencies and blockchain technology has also driven institutional investors’ interest in the cryptomarket. Many people today are discussing cryptocurrency-related topics than before, a trend that is converting many prospective investors into real crypto investors.

As they enter the cryptomarket, institutional investors are bringing their knowledge and expertise and are likely to engage relevant agencies to resolve some of the issues that are hindering the market’s growth, such as regulation. By doing so, investor confidence will increase and cryptocurrency volatility will decrease.

Alicia Belzberg, CEO and co-founder of Infinigon Group says, “Finally, social influence has played its role in legitimizing the use of cryptocurrencies and the underlying blockchain technology. Infinigon Group is already developing an institutional-grade crypto trading platform to connect all major crypto exchanges.”

So far, the U.S. and UK are the biggest supporters of cryptomarket. However, several other countries, including France, Argentina, Germany, Finland, South Korea, Israel, Japan and Venezuela, have already announced their support and plans for cryptocurrencies. Involvement of institutional investors from such countries will definitely promote growth and stability of the cryptomarket

Tali Rezun, CEO and co-founder of
4th Pillar says, “Institutional investors will offer volume to the cryptocurrency market. As the volume of crypto market cap grows, the volatility will be lower. These investors usually invest long-term and that is what this market lacks. To diminish volatility, the cryptocurrency market needs institutional investors.”

Moving forward, we expect to see several institutional investors establish cryptocurrency funds. This will certainly boost their prices and market cap significantly.

Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.

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