Up to this point, the cryptocurrency craze is something that has largely been the dominion of so-called retail investors. These are the unaffiliated individuals leading everyday lives who have taken to Bitcoin, Ethereum and the rest of the coins available because of the benefits they provide, as opposed to traditional currencies. These folks have also taken advantage of the rising value of the coins as well, many becoming extremely wealthy due to the increasing popularity. The entities who have been largely left out of the cryptocurrency banks have been the institutional investors, which consist of banks, funds, and larger groups that usually have the advantage over the retail investors in every other aspect of the investment world.
At some point, the institutional investors are likely to become involved in cryptocurrency in some capacity. There is no timetable for that happening just yet, although some experts think that it may occur sooner than people realize. When it does, the effect on Bitcoin and the rest of the crypto coins might be hard to gauge in the short term, although it seems like a net positive for the long haul. If you plan on investing in Bitcoin or its brethren, a trading program in the mode of Bitcoin Loophole might be the easiest way for you to get through this confusing asset class. Here is a look at what to expect as institutional investors slowly begin their mating dance with the crypto asset class.
1. What’s holding it Up
Right now, the biggest obstacle to institutional investors stepping into the cryptocurrency fray is the lack of a reliable holding area for investment money that is parked in crypto assets. Coin exchanges have proven unable to hold off hackers in many instances, and it’s unrealistic for institutional investors to have giant crypto wallets of their own to store coins away. Until this problem is solved, there likely will be no institutional investment in crypto on a large level.
2. When It Happens
What will happen when the institutional investors become involved is it will in many ways provide the crypto coins with a kind of establishment sheen. It will also likely increase their value since demand will be astronomically greater, so those holding on to the coins should receive a short-term boost as if a stock had split.
3. The Long-Term Outlook
The problem with institutional investors getting their tentacles on crypto coins is that it has the potential to once again put retail investors in the back seat. And that could rob crypto of its very essence, because, if nothing else, it has proven to be a populist currency. The hope is that the retail investors still have a bigger seat at the investing table than they do with traditional stocks, but it is difficult to see how that will happen when the might of the bigger players steps into the picture.
Institutional investment in cryptocurrency seems almost counterintuitive now. But it won’t be long until it happens, and those who are already in the crypto game should be prepared to react.