Institutional Investors were not the first movers into crypto. But their scepticism has been helped by the evolving crypto market. Just not entirely.
As the market for cryptocurrencies has increased in size and liquidity, investing in the crypto market has become feasible for even the largest institutional investors.
But what percentage of Crypto do institutions own today? Who owns it and why? Has crypto evolved into an asset class with an expected return, diversifying features and a store of value?
Or has the recent collapse of the stablecoin UST and the associated crypto token LUNA tempered interest? Institutional Investors are revisiting the properties of Crypto for inclusion in their portfolios, using future Central Bank Digital Currencies (CBDC's) as a benchmark. And assessing the wider opportunities that distributed ledger, smart contracts and tokenisation presents.
The market cap of cryptocurrencies peaked in late-2021 at $3.0 tn and has since plummeted to around $1.3 tn. The primary catalyst for this decline has been an increasingly hawkish Fed with financial conditions tightening by the most since the global financial crisis. The drying up of liquidity has negatively impacted all risk assets, but with an especially pronounced impact on crypto.
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