‘Tidal wave’ of institutional money is coming for crypto

Analysts at HC Wainwright & Co. believe that large institutional investors are just beginning to invest in crypto ETFs, leading to the need for regulatory clarity in the sector.

Referring to the recently held Coinbase Crypto State Summit, analysts expressed a positive sentiment about the crypto industry as a whole. They firmly believe that there is positive momentum building in the crypto ecosystem and more money is coming.

The summit, which took place in NYC, created bullish sentiment on Bitcoin and digital assets, highlighting the growing institutional interest in crypto. Key topics at the event included the successful launch of spot Bitcoin (BTC) ETFs, the evolution of payments and stablecoins, tokenization of real-world assets, and the need for better crypto regulation in the US.

Institutions are just starting their investments

Following the migration of spot BTC ETFs, there has been a significant rally in interest from new investors for BTC and other digital assets.

Spot BTC ETFs have totaled over $15 billion in net inflows and manage approximately $63.5 billion in assets, making them the fastest-growing ETF class in history. Coinbase serves as the custodian of approximately 90% of these assets.

However, approximately 80% of these inflows are coming from retail investors, and the major broker-dealer and investment advisory platforms are still doing their “due diligence,” so further growth and even larger inflows are expected as these products gain broader approval.

“We expect a massive wave of institutional inflows once major wealth platforms approve BTC ETFs,” analysts said.

Additionally, more than $70 trillion in wealth is expected to shift to younger investors (Millennials and Generation Z), who are much more inclined to invest in crypto than the older generation.

Tokenized assets

Traditional financial systems are slow to change, but the broader crypto industry is evolving beyond just an asset class and store of value to real-world utility.

“The total volume of stablecoins will reach $10 trillion in 2023, exceeding the total transaction volume of Mastercard, the world’s second largest payment network. Coinbase found in a recent survey that 56% of Fortune 500 companies are actively working on projects on blockchain. ” the report read.

BlackRock, the world’s largest asset manager, has tokenized real-world assets on the Ethereum blockchain. BlackRock USD Institutional Digital Liquidity Fund has $382 million in AUM.

Other analysts believe the global Exchange Traded Fund (ETF) market could reach $35 trillion in the next decade, including crypto investments.

Regulatory clarity

Proper regulation could benefit the crypto industry and encourage institutional investors to get involved. Recent bipartisan support in the House of Representatives for the Financial Innovation and Technology for the 21st Century Act (FIT21) proposes a more conducive regulatory environment for crypto.

Citing all these reasons, HC Wainwright analysts are hopeful that clear and thoughtful regulations in the US will positively impact crypto prices and trading volumes by attracting institutional investors who have been “sitting on the sidelines” due to lack of clarity.

They reiterated a “Buy” rating on Coinbase Global, Inc. (COIN) with a price target of $315 per share. COIN is currently trading at $238.18