The crypto era started in 2009 with the invention of Bitcoin – the first and the most popular digital asset. In those times, crypto assets were perceived as “tech geeks’ stuff” and not taken seriously. In 2020 – 2021 the crypto market experienced a bull run – the BTC price rose to $64,000. Ethereum, Cardano, Binance Coin, and other altcoins followed the trend, driven by the evolution of decentralized finance and NFT. That was the year when real-world companies and financial institutions started to show interest in cryptocurrency technologies.
In this article, we will discuss crypto institutional adoption – what companies join this market and how.
Who are Crypto Institutional Investors?
The year 2021 was marked by my institutional flow into the crypto sector. These are hedge funds, corporates, investment firms, etc. – most of the biggest Wall Street names, who decided to offer access to digital assets to their clients.
This trend developed rapidly after the recent boom in institutional interest after the asset management giant BlackRock applied for a spot Bitcoin ETF. Being one of the largest financial companies, BlackRock caused a buzz, followed by many other loud names (Invesco, WisdomTree, etc.) to apply for spot Bitcoin ETF.
What companies invest in crypto? Let’s see:
- Technological companies (e.g. Tesla);
- Payment processors (PayPal);
- Hedge funds, pension funds;
- Family firms;
- Banks (JPMorgan Chase, Bank of America).
An entity, financial company, or just a businessman can participate in the crypto market by adding liquidity to an institutional crypto exchange. High liquidity allows for large trade amounts, which is crucial for institutional trading. To ensure sufficient liquidity, crypto platforms partner with companies that are willing to participate actively in the market and maintain their high liquidity level. A market making program may be provided by a company, entity, or even an individual trader, that is responsible for liquidity provision to a trading platform.
Conclusion
The crypto market saw significant growth in 2021, drawing interest from major institutional players like hedge funds, corporations, and financial giants. Institutions are actively participating in cryptocurrency organizations, facilitating a dynamic and inclusive environment for digital assets. The ongoing institutional participation is shaping a more mature and legitimate crypto landscape.
