David Duong, the Head of Institutional Research at Coinbase, recently spoke about institutional investors’ interest in cryptocurrency assets beyond bitcoin and Ethereum. He stated that institutional flows on Coinbase are increasingly being directed toward other digital assets besides BTC and ETH.
Factors Driving Institutional Interest Beyond Bitcoin and Ethereum
Duong noted that his remittances are broader than just bitcoin and that almost all institutional flows on Coinbase are directed toward altcoins. According to him, 55% of institutional flows on Coinbase are still on bitcoin and ETH, leaving the balance for altcoins.
Duong stated that there is still a lot of focus on what is happening in the rest of the ecosystem outside of just bitcoin and Ethereum. He further added that Ethereum’s upcoming Fork will be on people’s radar, even though market conditions remain relatively uncertain due to macro factors, seasonality, and the possibility of crypto being related to other risk assets.
Duong noted that the current period is seasonally weak for a lot of risk assets as people are putting money into their 401ks, receiving bonus payouts, and writing lots of checks before tax season. He believes that the market’s focus on macro factors is causing a lack of clarity, and investors are not fully able to understand the market’s direction.
Institutional Investors’ Growing Appetite for Altcoins and Other Digital Assets
Institutional investors’ interest in cryptocurrencies has increased in recent years, with many seeing it as a viable alternative asset class. This trend is due to several factors, including the growth of the cryptocurrency market, the increasing number of institutional-grade trading platforms, and regulatory clarity.
The growth of the cryptocurrency market has led to an increase in institutional interest in digital assets. The total market capitalization of cryptocurrencies has grown significantly in the last few years, reaching over $2 trillion in early 2021. This growth has attracted the attention of institutional investors who are always looking for new investment opportunities.
Another reason for the increase in institutional interest is the availability of institutional-grade trading platforms. Coinbase, for instance, is a leading digital asset exchange that caters to institutional investors. The exchange provides a secure and reliable platform that allows institutions to buy, sell and store cryptocurrencies. Other trading platforms, such as Gemini and Kraken, are also catering to institutional investors, which is making it easier for them to invest in digital assets.
What Drives Institutional Interest in Alternative Digital Assets?
Regulatory clarity is also contributing to the growth of institutional interest in digital assets. Governments around the world are beginning to recognize the potential of cryptocurrencies and are enacting laws to regulate the industry. This regulatory clarity is giving institutional investors the confidence to invest in cryptocurrencies, knowing that the market is becoming more secure and stable.
Institutional investors’ interest in cryptocurrencies is not limited to bitcoin and Ethereum. They are also exploring other digital assets such as altcoins, stablecoins, and decentralized finance (DeFi) tokens. Altcoins are any cryptocurrency that is not bitcoin, while stablecoins are cryptocurrencies that are pegged to a stable asset such as the US dollar. DeFi tokens are digital assets that are used in decentralized finance applications.
Conclusion
Institutional investors’ interest in cryptocurrencies is growing, and they are increasingly exploring other digital assets besides bitcoin and Ethereum. The growth of the cryptocurrency market, the availability of institutional-grade trading platforms, and regulatory clarity are contributing to this trend. It will be interesting to see how this trend evolves in the future and how institutional investors’ interest in digital assets shapes the cryptocurrency market.
