Last Updated on January 22, 2025 by Olga
Institutional investors are believed to drive the cryptocurrency market’s adoption and growth. Their involvement promises to make crypto widely recognized and accepted as a truly global currency. Bitcoin is expected to gradually become an alternative to gold and skyrocket to unprecedented price levels.
But is this really how institutional investors work? In which direction are they actually driving the crypto market—and, after all, who are they? In this article, we’ll explore the latest examples of major whales’ interest in crypto, uncover the reasons behind it, and describe how they’re truly affecting the market.
Summary: Traditional markets are bringing less profit than before, leading large investors to find crypto investing lucrative. Although they were skeptical in the past, the crypto market now appears mature and reliable enough to attract significant investments. Institutional investors are poised to bring stability and efficiency to the crypto market.
What’s happening?
First, let’s review the latest developments—2020 was a landmark year for institutional investors entering the crypto space:
Microstrategy investments
In August and September, this Nasdaq-listed business analytics and mobility platform invested over $425 million in Bitcoin. In December, they added another $50 million, even with BTC already over $19K. Today, with the current market cap growth, Microstrategy’s Bitcoin holdings exceed $700 million, setting an inspiring example for other corporations.
Public support for Bitcoin
BlackRock, an American global investment management corporation with $8 trillion in assets under management, recently expressed optimism about Bitcoin. Their chief investment officer of fixed income, Rick Rieder, called Bitcoin a highly functional asset that’s gaining popularity among millennials. He even suggested that Bitcoin “could take the place of gold to a large extent” in the future—an unprecedented endorsement from an institution of this caliber.
PayPal to support cryptocurrency
Starting in early 2021, PayPal’s 361 million users were given the ability to buy, sell, and hold Bitcoin, Ether, Litecoin, and Bitcoin Cash. The company aims “to increase consumer understanding and adoption of crypto coins,” a move perfectly aligned with this article’s topic. Another payments platform, Square, had already announced investing 1% of its assets into Bitcoin.
36% of institutions have invested in crypto
A survey by Fidelity Digital Assets revealed that 36% of institutions have invested in crypto, with participation increasing among European companies (45%) and American firms (27%) compared to the previous year. The findings confirm a growing interest in digital assets as a new class of investable assets.
What is driving the investors’ interest?
Safe Assets Are in Crisis
Traditional methods of preserving wealth, such as savings accounts and high-quality bonds like U.S. Treasuries, are yielding much lower returns than before. In some cases, profits are so low that inflation erodes them, turning real returns negative. In contrast, cryptocurrencies like Bitcoin have shown extremely high long-term ROI, making them attractive to investors.
Discouraging Fiscal Policies
Countries like Denmark, Switzerland, and Japan have implemented negative interest rates to combat deflation. While beneficial for their economies, such rates do little to entice traditional investors, pushing them to explore alternatives like crypto.
Crypto’s Rapid Growth
With swift advancements in blockchain technology, the crypto market now boasts promising and credible projects offering high ROI
Fear of Missing Out (FOMO)
The days of the unregulated ICO craze in 2017 are over. Today, effective regulations in many jurisdictions have increased confidence in the crypto market, reducing risks of scams and frauds.
Institutional Investors’ Impact on the Market
With all the examples and reasons discussed, let’s now explore how whales actually affect the market:
Institutional Investors Help the Crypto Market Mature
A common misconception is that whales will centralize the crypto market, undermining its initial vision of a trustless, intermediary-free decentralized ecosystem. On the other hand, some believe that the influx of institutional investors will cause Bitcoin prices to skyrocket. These are polarizing views that are, in reality, far from the truth.
The reality is that institutional investors use their experience to limit risks and maximize returns. This approach helps combat volatility and increase liquidity in the market, leading to the following outcomes:
Yields Might Decrease, but That’s Inevitable
As markets mature, increased stability naturally comes with reduced volatility. This is a standard progression in any market. Bitcoin is still likely to deliver substantial ROI in the near future, but these extraordinary gains may not last forever. Whales will trade high volatility for steadier, albeit less dramatic, returns.
Investors Themselves Are Not Crucial for Bitcoin’s Growth
Other factors, such as Bitcoin’s adoption rate and the current macroeconomic environment, play a much larger role in shaping its trajectory. While institutional investors are a significant part of the ecosystem, they are not the sole driving force. For example, PayPal’s recent crypto integration has the potential to triple Bitcoin’s user base. Experts predict that such developments will have a massive impact on the industry, likely more than institutional investors alone.
Seize your opportunities in crypto!
While the whales mentioned above buy and hold Bitcoin, many regular users aim to maximize their profits from the crypto market. Selling Bitcoin may not seem like the best option right now, but the desire to utilize this cryptocurrency remains strong. Cryptocurrency lending services like CoinRabbit allow users to get a crypto loan in USDT in a fast and secure way. While you still own your Bitcoin, you now have some extra money for your current needs. You can back to our crypto lending platform to repay your cryptocurrency loan at any time. Learn more about using your Bitcoin without selling it here.
