Bitcoin’s price rebound is bringing renewed attention to crypto adoption, and all signs point to significant investment moving into blockchain assets over the course of the next few months. Not surprisingly, comparisons are being made to 2017, when Bitcoin, and many altcoins, rapidly increased in value, reaching all-time highs in early 2018. Nevertheless, much has changed across the crypto space over the past two years, and this next bull run is likely to include substantial interest from institutional players.
The fact that virtually all crypto investment has, to-date, been private and unregulated is one of the hallmarks of the blockchain space. There are very few professional investment funds, or involvement from legacy financial firms. Those that exist, however, are now seeing record highs. Grayscale Bitcoin Trust, for example, has seen record growth, and now holds over 225,000 Bitcoins on behalf of its shareholders. Also, the Chicago Mercantile Exchange (CME), has recorded a substantial increase in Bitcoin futures contracts, posting an incredible 33k on May 13th alone, which was worth well over USD $1 Billion.
Investment via professional, established financial firms is about to become far greater as more of these institutions become involved in blockchain assets. E*Trade and Fidelity will both start offering crypto trading within a few weeks, and interest from the public in crypto ownership is higher than ever. There is little doubt that more of these firms will soon join to take advantage of this growing market.
Importantly, however, is the fact that institutional interest is emerging from parties not affiliated with financial services. For example, logistics and manufacturing companies that intend to use blockchain technology are looking closely at VeChain and Iota, and could acquire large quantities in anticipation of future need. Also, many institutions are looking at distributed applications (dApp) platforms such as Ethereum and Stellar for the same reasons.
There is no doubt that this activity by corporate players is contributing to the significant volatility in the cryptocurrency markets. Although Bitcoin is clearly showing its strength as the flagship platform, this status is certain to be challenged in the coming months. Increasingly market activity is being driven by news of real-world applications by businesses and governments, with alt coins gaining much of the attention.
A key takeaway from the present state of the blockchain space is the fact that private investors are no longer the only players in the market. Investment from many professional sectors is now moving into this revolutionary asset class and it is this movement that is driving the price recovery. Bitcoin is the present beneficiary, but the future is far to uncertain to determine which specific platforms ultimately attain mainstream use.
