Is this also your Third Crypto Winter?

The cryptocurrency market has seen its fair share of ups and downs, but for institutional investors and industry leaders like Fidelity and Galaxy Investment Partners, this is the perfect opportunity to double down on digital assets. From buying parts of cryptocurrency trusts to using derivatives to trade digital asset price developments, institutional demand for digital assets is on the rise.

Institutional demand for digital assets comes in the form of:

  • Direct cryptocurrency purchases, such as MicroStrategy buying more than 129,000 BTC to date or Tesla’s $2 billion in BTC holdings.
  • Purchasing parts of cryptocurrency trusts, like Grayscale’s Bitcoin Trust.
  • Using derivatives like futures and options to trade digital asset price developments.
  • Buying or selling NFTs like CryptoPunks.

The most vocal institutional holder of Bitcoin is the U.S. company MicroStrategy, whose CEO, Michael Saylor, purchased 129,218 BTC at an average price of $45,714.33.

I figure this is my third crypto winter. There’s been plenty of ups and downs but I see that as an opportunity… I was raised to be a contrarian thinker and so I have this knee jerk reaction: If you believe that the fundamentals of a long term case are really strong, when everybody else is dipping [out], that’s the time to double down and go extra hard into it.

Abigail Johnson, CEO of Fidelity | AUM $4.5 Billion

Latin American country El Salvador is another large institutional buyer of Bitcoin. President Nayib Bukele made Bitcoin a legal tender in September 2021, and the cryptocurrency has seen large success in terms of adoption.

The move to introduce a highly volatile asset as legal tender, which business owners have to accept, has drawn a lot of criticism, with some accusing Bukele of wasting taxpayers money Twitter recognition — after Bitcoin prices plunged in May 2022. We will see how his bet plays out.

What is going to happen is, one of these intrepid pension funds, somebody who is a market leader, is going to say, you know what? We’ve got custody, Goldman Sachs is involved, Bloomberg has an index I can track my performance against, and they’re going to buy. And all of the sudden, the second guy buys. The same FOMO [fear of missing out] that you saw in retail [will be] demonstrated by institutional investors.

Mike Novogratz, CEO of Galaxy Investment Partners | AUM $1.9 Billion

While many have been hesitant to enter the cryptocurrency market, Latin American country El Salvador has taken a bold step by making Bitcoin a legal tender, paving the way for adoption and legitimizing the digital currency. As institutional investors watch and wait, many believe that the market is poised for another boom. The future of digital assets is bright, and we look forward to seeing how this emerging market evolves.

This article is an extract from the 70+ page Institutional Demand for Cryptocurrencies Survey co-published by the Crypto Research Report and Cointelegraph Consulting, written by multiple authors and supported by Flow Trader, sFox, Zeltner & Co., xGo, veve, LCX, Finoa, Lisk, Shyft, Bequant, Phemex, GMI.