After a strong entry into the cryptocurrency market in 2020, institutional investors increased their participation in the industry in 2021. Business Development Director of Apifiny, a global digital asset trading network for institutional investors, Christophe Michot s expects this trend to continue this year and beyond. He also looked at the effects of this increased institutional participation in the crypto market.
Increased volume of institutional transactions
Michot identified two pieces of evidence that quite clearly reflect the continued maturity of the institutional crypto market, namely market capitalization, and infrastructure. In particular, he recalled that the market capitalization of cryptocurrencies recently reached the $2 trillion mark due to the growing participation of institutional investors. This has also been facilitated by the development of the market's basic infrastructure, which has evolved enormously over the past five years. As a result, institutional investors better understand how to profit from cryptocurrencies. Mr. Michot, therefore, believes that institutional exchanges will continue to develop.
Massive arrival of service providers and institutional tools on the market
To meet this growing demand from institutions, the Apifiny framework indicates that the cryptosphere will have to provide them with more suitable services and tools. He, therefore, predicts renewed activity in the development of support services, such as storage, security, and management of cryptocurrency assets and investment products, for the benefit of institutional investors. “ I expect this to continue as new companies emerge to provide greater accessibility to the cryptocurrency market than ever before. Which, in turn, will open new doors for small and medium-sized funds,” he said.
Altcoins will gain popularity
After bitcoin, altcoins should be the next to benefit from the growing institutional interest in crypto markets. Mr. Michot affirms in particular that the investors see enormous opportunities for growth there. “ I anticipate that altcoins will become more popular as investors look for ways to diversify their cryptocurrency portfolios. Volumes will move from bitcoin to ether, and it is already happening. For proof, just look at crypto asset manager Grayscale Investments, which recently expanded its portfolio of investment products to include a Solana -focused trust,” he said.
A Regulated DeFi Space for Institutional
According to Michot, institutional investors have so far stayed away from DeFi due to the market's lack of regulatory clarity and compliance checks. He argued that greater regulatory clarity will emerge when the SEC and other regulators provide new guidance. He infers that new DeFi platforms for institutional will gain popularity in 2022. With more clarity and the right platforms in place, Michot is confident that more institutional will enter the DeFi space.
Security solutions will become widespread
The massive influx of institutional funds will force companies in the cryptosphere to increase security around their products and services. Michot notes that cryptocurrency exchanges are beginning to take steps to further protect themselves and tend to partner with qualified custodians to manage custody risks. He claims that this trend should become more widespread in the cryptosphere throughout 2022 in order to further reassure institutional investors who are providers of large capital.
The five previous trends should therefore shape the future of the institutional crypto market according to Mr. Michot's forecasts. If confirmed, they should inevitably be accompanied by an influx of institutional capital into the cryptosphere.
Source: Cointelegraph
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