Analysis suggests institutional investors have an increasingly optimistic stance on the cryptocurrency ecosystem, while retail investors are still hesitant to return to the market.
Previously, BlackRock, the world’s largest investment management firm, partnered with Coinbase to offer cryptocurrency trading services to its institutional clients. A few days later, the company announced the launch of the Bitcoin Spot Private Trust.
According to Bloomberg, Leah Wald, CEO of digital asset investment management firm Valkyrie Funds, said in an interview with Bloomberg that:
“BlackRock really wouldn’t be doing this if there wasn’t significant demand from both institutional and retail clients.”
This institutional investment in the digital asset space shows that institutional interest in digital assets has not waned due to the slump in the cryptocurrency market.
According to Coinbase’s second-quarter earnings report, the cryptocurrency exchange’s core retail customers have been inactive and on the sidelines.
The exchange recorded a record loss of $1.1 billion for the quarter.
James Malcolm, head of foreign exchange and crypto research at UBS, believes that the cryptocurrency market is still primarily a retail-driven market. That group will return when it feels like a bottom has been reached.
“The hope is that at some point in the future, institutions will come into the space, institutional adoption will pick up a lot, and it will start to look more like traditional financial markets. But this is still predominantly a retail-driven market,” Malcolm added.
Nevertheless, retail investors continue jumping on the Bitcoin bandwagon based on the rise of non-zero BTC addresses. Among small addresses, those holding less than one bitcoin are climbing rapidly, according to Market insight provider Glassnode.
Noelle Acheson, Head of Market Insights at Genesis, said: “This suggests that retail is participating, just not yet in the kind of size that would add more momentum to the overall market.”