Analysts at H.C. Wainwright & Co. are confident that major institutional investors are just beginning to enter the world of crypto ETFs, highlighting the urgent need for regulatory clarity within the industry.
Drawing from insights shared at the recent Coinbase State of Crypto Summit in NYC, the analysts expressed optimism about the overall crypto landscape. They see a strong positive trend emerging across the crypto ecosystem, with a surge in investments on the horizon.
The summit showcased a growing interest from institutions in crypto, sparking a bullish outlook on Bitcoin and digital assets. Key discussions at the event revolved around the successful launch of spot Bitcoin (BTC) ETFs, advancements in payment systems and stablecoins, the tokenization of tangible assets, and the necessity for improved crypto regulations in the U.S.
Institutions are still in the early stages of their investment journey
Since the introduction of spot BTC ETFs, there has been a notable upswing in the value of BTC and other digital assets, attracting a fresh wave of investors.
Spot BTC ETFs have accumulated over $15 billion in net inflows and currently manage around $63.5 billion in assets, establishing them as the fastest-growing ETF category in history. Notably, about 90% of these assets are under the custody of Coinbase.
Despite this growth, approximately 80% of the inflows are from retail investors, while major brokerage firms and investment advisors are cautiously assessing these developments. As these products gain wider acceptance, anticipations are high for increased growth and even larger inflows.
The analysts predicted that there will be a surge in institutional investments once prominent wealth management platforms approve BTC ETFs.
Furthermore, a transfer of over $70 trillion in wealth to younger investors – millennials and Gen Z – is anticipated, with this demographic showing a greater inclination towards crypto investments compared to older generations.
Tokenized assets are gaining traction
While traditional financial systems are slow to evolve, the broader crypto industry is progressively moving towards real-world applications, extending beyond mere asset classes and stores of value.
“Stablecoins facilitated $10 trillion in transactions in 2023, surpassing the total volume of the second-largest payment network, Mastercard. Additionally, a recent survey by Coinbase revealed that 56% of Fortune 500 companies are actively exploring blockchain projects,” highlighted the report.
BlackRock, the largest asset manager globally, has tokenized tangible assets on the Ethereum blockchain, with the BlackRock USD Institutional Digital Liquidity Fund managing $382 million in assets.
Another group of analysts foresee the global Exchange-Traded Fund (ETF) market reaching $35 trillion within the next decade, encompassing crypto investments.
Importance of regulatory clarity
Effective regulation could prove beneficial for the crypto industry, enticing institutional investors to participate actively. The bipartisan backing of the Financial Innovation and Technology for the 21st Century Act (FIT21) in the House of Representatives indicates a more favorable regulatory landscape for crypto.
Taking all these aspects into account, the analysts at H.C. Wainwright are hopeful that well-defined regulations in the U.S. will have a positive impact on crypto prices and trading volumes by attracting institutional investors who have been waiting for clarity.
They reiterated their “Buy” rating for Coinbase Global, Inc. (COIN) with a target price of $315 per share, while the current trading price stands at $238.18.