It all started with bitcoin, a decade back, and since then cryptocurrencies have come a long way. On one side blockchain startups are developing applications for almost every industry from supply chain to healthcare. On the other side, cryptocurrency trading and investments are becoming increasingly popular as investment vehicles with the onset of institutional investors.

With bitcoin named as the best investment asset of the decade, beating trading investment vehicles like gold, the cryptocurrency industry has entered a new realm. Moreover, traditional players and influential institutions have now started entering this space by offering services pertaining to cryptocurrencies. Governments across the globe have started drawing regulations around crypto services and markets. Such progressive steps and the subsequent growth of the crypto and blockchain industry strongly suggests that the mass adoption of crypto investments has already started.

In this article, we take a glance at how the cryptocurrency trading industry has progressed in the last decade. Also, what are the obstacles that the industry yet needs to overcome, and what does the future hold in store!

Cryptocurrency Investment Industry At A Glance

The magnitude of crypto and blockchain investments is going to be potentially massive. According to Statista, the blockchain technology revenue is going to climb by $39 million by 2025, with the financial sector leading this wave. While according to IBM, the global blockchain market is to grow to $60 billion by 2024.

Moreover, the cryptocurrency trading and investment industry are drawing the attention of institutional investors. A survey conducted by Fidelity Investments consisting of 400 U.S. institutional investors including crypto hedge funds, venture capitalists, financial advisors, and more shows that nearly 72% are keen to make investments that hold digital assets. The same survey showed that nearly 47% are likely to invest in digital assets as a part of their investment portfolio.

What are the factors that have contributed to the growth of cryptocurrency investments? What are the key elements that will likely contribute to cryptocurrency and blockchain investments? Let’s take a look.

1. The Growth of Bitcoin

$1 invested in bitcoin in 2010 would have been worth more than $90,000 in 2020. The digital currency became so prominent that it has created a market of 5000 cryptocurrencies today. It’s popularity as a digital currency, its exponential growth in price, and its success as a function of financial transaction has given it an edge. The prominence of bitcoin has made it a popular investment vehicle that even institutional investors have keen to be a part of.

2. Onset Of Institutional Institutions

In the last 3 years, a number of traditional institutional players have started platforms offering cryptocurrency services. Fidelity Investments launched its venture Fidelity Digital Assets while ICE launched the bitcoin futures exchange platform- Bakkt. Even tech players like Facebook and Twitter have plans to launch their digital currency and crypto payment venture respectively. With prominent players launching their cryptocurrency ventures, the mass adoption of the industry is inevitable.

3. Organized Investments

According to a report by Bloomberg, hedge funds and endowment funds have made massive purchases in digital coins with investments worth over $100,000. Grayscale Investment, holding one of the biggest bitcoin hedge funds reports that it took $608 million in cryptocurrency investments in 2019, surpassing all its previous records. The same report states that nearly 71% of the funds came from institutional institutions like hedge funds. Even banks like Goldman Sachs and JP Morgan have started developing cryptocurrency products as alternatives to traditional finance.

4. Ivy League Investments

Ivy league universities and managers have also started planning to invest in cryptocurrencies. As per this report, Harvard University, Stanford University, Dartmouth College, Massachusetts Institute of Technology, and the University of North Carolina have made investments in crypto hedge funds. Further, portfolio managers of prime universities have plans to launch hedge funds worth $200 million seeking investments in digital currencies.

5. Regulatory Environment

Governments and central bodies across the globe have started easing or drawing regulations pertaining to digital assets. A legal structure around various aspects including cryptocurrency trading, digital tokens, cryptocurrency exchanges, crypto service providers has been drawn in the last few years. From Germany declaring bitcoin as a legal tender to India removing cryptocurrency trading restrictions has enabled a wider community adoption in this industry.

6. Infuse of Supporting Infrastructure

Cryptocurrency markets work entirely in a different structure when compared with traditional investment tools. For instance, cryptocurrency markets run round the clock all time of the year. Mass adoption in cryptocurrency trading is difficult with persistent concerns about market volatility and operations. However, supportive infrastructure in the form of automated trading bots and secure exchanges have made crypto trading a seamless affair. At Cryptohopper, we offer services for automated cryptocurrency trading using robots that run 24/7 along with access to all the prominent cryptocurrency exchanges.

Supportive infrastructure in the form of secure cryptocurrency exchanges with advanced features and automated trading bots have made cryptocurrency investments simpler and easier to access.

Challenges To Mass Adoption In Crypto Industry

While it is true that this space has achieved massive momentum in the past few years, a number of issues yet need to be addressed. Moreover, the industry needs to be robust and resilient such that it meets the requirements of individuals and investors. Cryptocurrency investments need to be more inclusive such that it caters to demands of retail as well as institutional investors.

There are some concerns that the crypto industry needs to address in order to become a prominent investment vehicle:

  • Custodian Solutions-Cryptocurrency funds have been subjected to hacking, theft, or manipulative attacks in the past. A strong custodian solution that enables complete protection and security of custom
  • Liquidity Issues- The above points strongly suggest that institutional investors, big players, and institutions are joining the league of the crypto industry. However, a subsequent concern of distorting prices and market issues will need to be addressed.
  • Operational Issues-For crypto to become mainstream, a large number of users need to be able to use it. However, while people are familiar with cryptocurrencies they are not familiar with the operational aspects of digital currency. This includes managing private keys, opening digital wallets, transacting via a portal, and monitoring investment.
  • Regulations- While many nations have become crypto-friendly in the last few years, a number of countries yet restrict the use of digital tokens. In order to drive adoption on an international scale, it is necessary to have a global set of regulations.
  • Price Volatility- One of the main concerns of the cryptocurrency market is the huge volatility in prices of cryptocurrencies. In order for crypto to be used on a day to day basis as a financial instrument, there needs to be constant stability for long term usage.

Conclusive Remarks

The blockchain and crypto industry has come a long way but it still has a long way to go. However, all reports and studies strongly seem to suggest a trajectory growth with cryptocurrency investments. Furthermore, the community of crypto investors is growing at an increasingly fast pace.

The next few years will be a turning point for this space. With large institutions stepping up, investors turning their heads towards cryptocurrencies, and governments enabling a crypto-friendly legal environment- a number of investors and individuals are seeking ways to invest. More importantly, the revolution has just begun!