Analysts at HC Wainwright & Co. strongly believe that large institutional investors have just started investing in crypto ETFs, leading to the need for regulatory clarity in the industry.
Citing the recent Coinbase State of Crypto Summit, analysts expressed positive sentiment regarding the cryptocurrency industry as a whole. They firmly believe that positive momentum is building in the crypto ecosystem and more money is coming their way.
The summit, which took place in New York, highlighted growing institutional interest in cryptocurrencies, sparking bullish sentiment on Bitcoin and digital assets. Key topics at the event included the successful launch of Bitcoin (BTC) spot ETFs, the evolution of payments and stablecoins, the tokenization of real-world assets, and the need for better cryptocurrency regulation in the US
Institutions have just started their investments
Following the outperformance of BTC spot ETFs, there has been a significant rally for BTC and other digital assets, attracting new investors.
Spot BTC ETFs have accumulated over $15 billion in total net inflows and manage approximately $63.5 billion in assets, making them the fastest-growing ETF class in history. Coinbase serves as custodian of approximately 90% of these assets.
However, around 80% of these inflows come from retail investors, and major broker-dealers and investment advisory platforms are still doing their due diligence, so there should be more growth and even greater inflows as that these products gain wider approval.
“Expect a wave of institutional inflows as large asset platforms approve BTC ETFs,” analysts noted.
Additionally, more than $70 trillion in wealth is expected to shift to younger investors – millennials and Gen Z – who are much more likely to invest in cryptocurrencies than the previous generation.
Tokenized assets
Traditional financial systems are slow to change, but the broader cryptocurrency sector is evolving into real utility beyond just an asset class and store of value.
“Stablecoins saw total volume of $10 trillion in 2023, surpassing the total transaction volume for the world’s second-largest payment network, Mastercard, while Coinbase found in a recent survey that 56% of Fortune companies 500 is actively working on blockchain projects,” the report reads.
BlackRock, the world’s largest asset manager, has tokenized real-world assets on the Ethereum blockchain. The BlackRock USD Institutional Digital Liquidity Fund holds $382 million in assets.
Other analysts believe that the global exchange-traded fund (ETF) market could reach $35 trillion over the next decade, including cryptocurrency investments.
Regulatory clarity
Proper regulation could benefit the cryptocurrency industry and encourage institutional investors to get involved. Recent bipartisan support for the Financial Innovation and Technology for the 21st Century Act (FIT21) from the House of Representatives suggests a more favorable regulatory environment for cryptocurrencies.
Citing all these reasons, analysts at HC Wainwright hope that clear and thoughtful regulation in the US will have a positive impact on cryptocurrency prices and trading volumes, attracting institutional investors who have been “waiting on the sidelines” due to the 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
