The Crypto Industry Enters a New Era as Institutional Traders Invest
Institutional interest in digital assets is growing as major financial players continue to enter the cryptocurrency industry.
A growing number of indicators suggest that institutional agents continue to enter digital asset markets, which to date have been dominated by high-net-worth individuals and actively trading cryptocurrency enthusiasts. An example of this: Cryptocurrency markets are posting record highs in open interest on futures contracts at entities like the Chicago Mercantile Exchange (CME). Widely known as one of the largest financial derivatives exchanges in the world, the CME enables sophisticated traders to trade asset classes like agricultural commodities, energy, metals and futures and cryptocurrency options.
CME traders are generally institutions, not individuals, so this open interest in the digital asset market is noteworthy. Institutions already on board and active in the CME – trading in wheat and oil, for example – are increasingly turning to crypto futures as an alternative asset class.
In fact, the volume of derivatives increased to a record high in May, totaling $ 602 billion, while total spot volumes increased 5% to $ 1.27 trillion. As a result, derivatives accounted for 32% of the digital asset market in May, compared to 27% in April, according to the latest Crypto Exchange Review from CryptoCompare.
Other credible indicators include the latest report from Fidelity Digital Assets, a $ 7.9 trillion asset manager subsidiary. The survey revealed that of the nearly 800 institutional investors surveyed, almost 80% find something attractive about digital assets. Respondents rated three characteristics of digital assets as almost equally compelling, namely: they are uncorrelated with other asset classes (36%), offer an innovative technology package (34%), and offer high profit potential (33%) .
But what is much more striking is the fact that six out of ten respondents believe that digital assets have a place in their investment portfolio, and this survey was conducted before the recent COVID-19 pandemic. If the survey were to be conducted today, it would be interesting to see where the numbers would fall, given the widespread debate that the global crisis could be a turning point for the mass adoption of digital assets.
For example, macroinverter Paul Tudor Jones recently went public with his investment in Bitcoin (BTC) and attributed the pandemic to the substantial disruption of his interest in digital assets. His thesis is that quantitative easing will lead to inflation and he sees Bitcoin as one of the best hedges for inflation.
Supporting crypto assets at this level instills confidence in the entire asset class. The proof is in the numbers and these reveal that crypto assets are becoming increasingly popular with institutional investors.
Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.