Top 7 Crypto Trends to Watch Out for in 2020 (Part 3)
Thousands of institutional investors have already made big investments in the crypto space in 2019 alone. Will this trend continue in 2020?
So far in this series, we’ve covered some of the biggest trends currently unfolding in the crypto industry, including the recent increase in regulatory vigilance, rise of Central Bank-endorsed Digital Currencies (CBDCs), and decentralized exchanges. In this article, we explore what we believe is the biggest trend, one that will possibly go on to change the industry forever: the involvement of institutional investors in the cryptocurrency market.
While major institutional investors have expressed interest in adding cryptocurrencies to their portfolios, many do not because of a lack of proper mechanisms and regulatory clarity. This has started to change over the past two years, however, with almost the entire cryptocurrency ecosystem, including developers, startups, and established companies, working on simplifying and abstracting the technical nuances of cryptocurrency investment.
Past Problems for Institutional Investors
The single biggest problem faced by institutional investors in the past was the fact that the cryptocurrency market remained unacknowledged by many governments around the world. This gray market nature, however, changed with the emergence of the crypto derivatives market, which eliminated almost all regulatory uncertainty overnight. Having said that, it is important to note that the crypto derivatives market is still in its infancy and has a long way to go before it gains mainstream traction.
In the United States, CME Group and Cboe Global Markets have played a crucial role in offering Bitcoin futures to accredited, institutional investors. Established institutions, the very same entities that have traditionally shied away from cryptocurrencies, are now actively participating in the industry, which is a good indicator of what’s to come.
To further make things easier for institutional investors, cryptocurrency exchanges Coinbase, Gemini, and Kraken have each launched their own version of an institutional-grade qualified crypto custodian service, making storage and investing that much safer.
Another challenge for institutional investors was the lack of a regulatory body or framework. In recent years though, governments around the world have started to introduce cryptocurrency-related laws and have been taking active measures to ensure investor safety. This will likely stabilize the prices of many larger cryptocurrencies. Strict operating procedures, meanwhile, will limit the number of scandals, security breaches, and fraudulent ventures. Overall, this means that institutions, their stakeholders, and even retail investors will feel more comfortable with the idea of cryptocurrency investment.
The Mechanisms Are In Place, But What About The Demand?
“If you build it, will they come?” The question has been on the mind of many analysts and investors in the industry and the answer seems clearer than ever. The crypto industry has been the source of great fortunes for countless investors around the world. However, this source has mostly eluded institutional investors so far, not due to a lack of demand, but because of the lack of investing mechanisms. Now that doors for investment are opening up for institutional investors in 2020 though, will they invest?
In fact, they already are. Hundreds of institutional investors have already made big investments in the crypto space in 2019 alone and all signs show that this trend is here to stay.
The Latest Trend
As institutional investors find their way into the growing world of cryptocurrency, they will face a new challenge — that of data. Unlike traditional assets that have lived in their respective investment portfolios for several years, crypto assets are much harder to forecast as they’re relatively volatile. While improving regulations and increased adoption is expected to stabilize prices, many institutional investors may still find themselves reluctant to invest.
However, we believe that this problem will lead to a trend involving the emergence of platforms or services that will provide insights to institutional investors, specifically those related to the latest crypto-related developments. More crucially, these platforms will be a source of information and primary data that is coming directly from the original source.
The main benefit of primary data over secondary or tertiary data is that the data is not contaminated by unrelated, false, or outdated information that may be added at later stages. Many investors currently rely on news sites for their due diligence processes, which may be too slow for a professional or investment firm.
Alluva is one such platform that aims to become the world’s largest analyst platform and predictive insights provider by offering exclusive access to real-time market trends. For analysts, Alluva offers the opportunity to predict the growth potential of various crypto-assets for free in exchange for rewards. Accurate predictions are then analyzed through a proprietary algorithm. Lastly, this cleaned data is shared with institutional investors and a handful of other strategic partners. This way, institutional investors around the world rely on Alluva to track market sentiment and make better investment decisions.
To learn more about Alluva, visit our website here. For more informational content on the cryptocurrency market, stay tuned to our blog here or Medium profile here. To reach out to the Alluva team, join the discussion on Twitter here or our Telegram group here.
