Analysts Predict More Institutional Investors’ Actions In Crypto In 2024
In a recent report, financial analysts from different crypto firms have predicted that there will be increased institutional investor activities in the crypto industry come 2024. The anticipated surge in the performance of financial institutions in crypto is reported to be promoted by rate cuts by the US Federal Reserve, improved crypto regulatory clarity, as well as the potential endorsement of spot bitcoin exchange-traded funds by the United States Securities and Exchange Commission.
Meanwhile, recent data from Deribit derivatives exchange showed that the predicted trend has already started as it showed a significant increase in crypto activities from financial institutional actors since October. According to Luuk Strijers, the Chief Commercial Officer at Deribit, the data shows that more exposed players from traditional markets are positioning themselves to participate more in the crypto market in 2024.
ETFs Endorsement May Encourage Institutional Players
Strijers pointed out that there has been a significant increase in institutional activity since late October, a move majorly prompted by massive anticipation for the ETFs endorsement in America by January. More so, analysts from Bitfinex also corroborated the report as they stated that the upcoming spot bitcoin approval is the major factor that heralded the increasing interests of financial institutional actors in the crypto industry.
According to the report, major financial institutional players like Valkyrie, BlackRock, ARK, Fidelity, among other asset managers are currently seeking approval of their ETFs proposal from the US SEC. Bitfinex analysts stated that the endorsement of such a financial instrument (ETFs) would allow both retail and institutional investors to bet on regulated and more accessible prices of major crypto assets. And they added that the approval is predicted to be passed as early as January 2024.
Fed Rate Cuts May Boost Institutional Action In Crypto
Furthermore, Bitfinex analysts also stated that the potential reduction in interest rates by the US Federal Reserve in 2024 would encourage a risk-on sentiment in institutional players, which could eventually prompt them to participate more in financial risk assets like bitcoin and other cryptocurrencies. They added that cutting interest rates would most likely make bitcoin more attractive to institutional investors, prompting them to invest in it despite the higher risks involved.
In addition, Bitfinex claimed that at the last FOMC (Federal Open Market Committee) meeting, market indicators suggested an imminent rate pause and a rate cut next year. They added that bond yields and traders’ expectations are already being influenced by the rate pause, meanwhile, rate cuts are expected to occur around May of next year.
Additionally, Sergei Gorev, the Risk Manager at YouHodler, remarked that the market expects the US Federal Reserve to soften its hold on rate hikes by next year. He added that the futures and options markets are already reflecting the impact of the anticipated rate cuts.
Regulatory Clarity Would Encourage Institutional Investors
According to Bitfinex analysts, the crypto industry anticipates more regulatory clarity from financial regulators across the world by 2024; this would significantly encourage institutional investors to participate more in crypto activities. They added that the approval of spot BTC ETFs would be the first in line for a major shift towards crypto regulatory clarity, as it is expected to create a more regulated investment tool for retail and institutional players.
Furthermore, Oliver Linch, the CEO of Bittrex Global, suggested that 2024 seems to be the year when global regulators would begin the process of making their digital assets regulations clearer and more comprehensive. Stating some regulatory actions slated for 2024, Linch pointed at the MiCA legislation introduced by the European Union and scheduled to be fully implemented in 2024. Also, he highlighted the major regulatory developments in regions like Japan, Hong Kong, and Singapore.
In addition, he referenced the recent Digital Securities Sandbox launched by the United Kingdom, while stating that governments across the world are eventually realizing that to become a crypto hub, they cannot rely on political aspirations or nice speeches, but instead, they need solid and robust regulations that fit all purposes.
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