Big investors, and institutional cryptocurrency platforms, largely hold bitcoins long-term. Other options for institutions to engage with crypto include participation in a market maker program, etc. Almost all these activities require a search for a reliable institutional crypto trading platform.
Starting from 2017 – the year when Bitcoin first soared over the 19-dollar mark, it ceased to be “Bitcoin for tech geeks” or retail investors. Things have changed drastically after 2021’s all-time high, when BTC crossed the mark of $67.
These years and events were marked as the beginning of crypto institutional trading. What institutions invest in digital assets and what holds others back?
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Biggest Investors in Crypto
We’re going to put the data in a table:
|BTC Holdings in Dollars
|Galaxy Digital Holdings
|Marathon Digital Holdings
|Coinbase Global, Inc.
These investors, and institutional cryptocurrency platforms, largely hold bitcoins long-term. Other options for institutions to engage with crypto include:
- participation in a market maker program;
- yield farming, lending, insurance;
- brokerage services;
- hedge funds or venture capital funds;
- crypto derivatives;
- participation in ICOs.
Almost all these activities require a search for a reliable institutional crypto trading platform. WhiteBIT and Coinbase are good examples.
What Holds Institutional Cryptocurrency Investors Back?
Despite such loud names as MicroStrategy and Tesla holding bitcoins, there’s no massive influx of companies into the crypto sector. Why? The main reason is a lack of security, including:
Lack of regulation – unlike traditional financial markets, the cryptocurrency space is relatively young and lacks comprehensive regulatory oversight.
Institutional crypto custody challenges – the decentralized nature of cryptocurrencies poses unique challenges in custodianship.
Volatility – crypto markets are known for their price volatility, which can be both an opportunity and a risk. Institutional investors, often operating with large amounts of capital, are concerned about the impact of rapid price fluctuations on their portfolios.
Cyber threats – the decentralized nature of blockchain technology attracts sophisticated cyber threats. Institutional investors are prime targets for cybercriminals seeking to exploit vulnerabilities in exchanges, wallets, and other crypto infrastructure.
Regulatory compliance – institutions face the challenge of ensuring compliance with existing and evolving regulations in the crypto space.
Reputation risks – security breaches in the crypto space can have a cascading effect on the reputation of institutional investors.
The surge of institutional interest in cryptocurrencies, exemplified by major players like MicroStrategy and Tesla, has marked a transformative shift in the crypto landscape. However, the hesitant entry of many institutions into the sector can be attributed to critical concerns.
The absence of comprehensive regulatory oversight, coupled with challenges in crypto custody, heightens the risk profile for institutional investors. Volatility in crypto markets poses both opportunities and risks, particularly for entities managing significant capital.
The persistent threat of cyber attacks on decentralized blockchain infrastructure further amplifies reservations among institutions. Striking a delicate balance between regulatory compliance and innovation remains a formidable challenge, and the industry's reputation risks stemming from security breaches continue to be a deterrent.
As the crypto space matures, addressing these concerns will be pivotal in fostering wider institutional participation and securing the sector's long-term viability.