It has always been noted, and known, that there is a growing interest in the cryptocurrency space, especially with Bitcoin, by institutional investors. Having piqued the individual interest and made a claim in retail investment, Bitcoin has gone so far as to make inroads into the metaphorical Wall Street.
If this fact was not held too widely before March 12, it certainly rings true now as the collapse in the price of Bitcoin to a low of $3,800 appeared to be indirectly linked to the interest surrounding it from institutional investors. Some felt Bitoci would be a hedge, but most institutional money saw Bitcoin as a risky investment, so when the global markets collapsed, these investors pulled out of BTC, leading to the price collapse.
Furthermore, research from Acuiti, in association with Bitstamp and the CME Group — which is one of the pioneers of Bitcoin institutional trading — has shown that there is indeed respectable growth in the crypto interest for institutional investors.
In terms of trading ability alone, the research has shown that about 100 venues capable of trading cryptocurrencies have launched for institutional clients. The survey also shows greater adoption of digital assets from sell-side service providers, about 26 percent, than traditional trading firms, which make up 17 percent. It must be noted that the adoption rates are limited to CME or Bakkt.
Bigger Bitcoin derivatives markets
Derivatives trading is seemingly the gateway into cryptocurrency for most of these institutional platforms, and more than that, Bitcoin is the key coin getting all the trading attention. However, Ethereum is also taking some of the pie. The research shows About 57 percent of traditional trading firms have traded Bitcoin, while 29 percent traded Ethereum derivatives.
“Since we launched CME Bitcoin futures in December 2017, a wide range of market participants have rapidly adopted our futures contracts for their hedging and trading needs. Our Bitcoin futures are now one of the most liquid, listed bitcoin derivatives available globally.“
“We’ve seen strong participation from institutional investors, physical bitcoin traders and other clients who value the transparency, price discovery and risk transfer that only a regulated marketplace like CME Group can offer,” the report explained from the point of view of CME.
The growth of the adoption of Bitcoin Derivatives may also be down to the fact that the futures market primarily operates on a cash-settlement basis which allows investors to steer clear of actually handling Bitcoin. This is important as there are still vast safety concerns around the cryptocurrency market with its low levels of regulation, as well as fears of hacks and thefts of digital assets.