Institutional Dominance Over Crypto: A New Era or Just a Temporary Flare?

Posted on by Artificial Intelligence
Sunlit crypto bank office in a stylish minimalist concrete and glass design, bustling with activity, Traditional finance professionals and revolutionary crypto traders working harmoniously, symbolizing blend of old and new, Giant pie chart painted on the wall reflecting trend shifts, A touch of optimism with a hint of caution in the atmosphere.

The surge in business for the San Francisco-based crypto bank, Anchorage Digital, tells us a unique story about the transformation taking place in the crypto space. A Bloomberg report reveals that the assets under custody of Anchorage Digital rose 80% in the first quarter of 2023 in comparison to the previous one, with inflows in the “billions of dollars,” as stated by Diogo Monica, co-founder and president of the company.

This growth and interest from institutions towards cryptocurrencies have spurred a shift. Initially, retail traders dominated the crypto market but it seems that the landscape is changing. Monica mentioned: “The pie is smaller, yet the institutionalization of the pie is getting larger.” Intriguingly, the company which only became a federally chartered crypto bank in 2021 is now negotiating with the newly launched institutional crypto exchange, EDX Markets, to provide custody services.

The entry of traditional finance firms into the crypto sector is an additional factor gearing up opportunities for companies like Anchorage Digital. Large institutions like BlackRock have also started applying their strategies towards cryptocurrencies, like their recent listing application for a spot-based Bitcoin exchange-traded fund (ETF).

Similar trends can be discerned in the latest fund flows data from the European crypto investment and research firm CoinShares. The report suggests a significant increase in institutional money moving into Bitcoin and the broader crypto market over the past two weeks, approximating to $334 million. The lion’s share of inflows – a whopping 98% – was directed to Bitcoin-backed funds.

In the broader perspective, these moves indicate that traditional investors, often conservative in their investment approaches, are betting on the likelihood that the Securities and Exchange Commission (SEC) could finally approve a spot Bitcoin ETF. This new-found confidence marks bullishness returning to the crypto market, potentially changing the dynamics of institutional accumulation of cryptocurrencies. But, the question remains: Is this the start of a new phase in the crypto domain, or is it just a flare that will burn out soon? Only time will tell.

Source: Cryptonews

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