Institutional crypto bashers are softening, but time is running out to join in


Institutional crypto bashers are softening, but time is running out to join in

Crypto enthusiasts have always argued that all things crypto will finally reach critical mass when large blocks of institutional capital flood into the marketplace. An argument can be made that billions have already been invested in Initial Coin Offering (ICO) development efforts, as well as private corporate capital that has been allocated to an abundance of private internal blockchain projects. Cryptos, however, are still viewed as strange in many quarters, but that attitude is gradually softening, especially in the institutional sector. The question is whether the vast majority of diehards will ever join in.

Studies have shown that there are five segments of technology adoption. Different groups approach innovation and the accompanying change in decidedly different ways. The breakdown from recent research is as follows:

  • Innovators (2.5%): These are the first individuals to latch onto innovation, are young, well educated, and more than willing to take on risk;
  • Early Adopters (13.5%): These individuals have the highest degree of opinion leadership of the five groupings. They tend to be more discrete in their choices;
  • Early Majority (34%): These individuals come onboard, but only after a longer period of time. They tend to be slower in their rate of adoption of change;
  • Late Majority (34%): These folks only join in after the average members of society have taken the plunge. They are typically skeptical about innovation;
  • Laggards (16%): These people are the last in the chain of adoption and have an aversion to change.

These demographics have a profound effect on how new technologies are marketed and are absorbed by society. If we step back and view the crypto experience, innovators and early adopters have certainly stepped up to the plate. There is a subset of institutional players that have been open-minded enough to assume the “Early Majority” role, as evidenced by several studies that reveal that institutions are already participating in the crypto space. Recent research by the analysts at Binance claims that as much as 7% of the total value of crypto positions are held by institutions, perhaps, the early majority.

Another indication that a portion of institutional investors is breaking ranks is borne out by activity in the BTC futures markets. Per one report:

Over the past couple of months, institutional appetite for cryptocurrency has been on the increase. During Consensus Week, the CME Group reported an all-time high for the number of new Bitcoin futures taken out – up to 33,677 contracts. At the time, these contracts had a market value of over $1.26 billion. Although CME futures are exchanged in fiat currency, gains in the futures market could reflect increasing excitement from the institutional corner.

Several surveys have suggested that a majority of institutional players want to have cryptos in their portfolios, but have been hesitant until the market met their standards for stability, security, custodial arrangements, and, of course, liquidity. Offerings from Fidelity and Coinbase already address many of these concerns. Analysts have attributed a portion of the recent surges in the market to institutional money entering and leaving the market, as if testing the “rails”, so to speak, since confidence is not quite there for complete adoption.

One crypto advocate senses that the late majority and laggards may soon soften further and will have no choice but to jump into the market with both feet:

On the other hand, if the underlying technology and payment rails prove sturdy, it may be enough to reassure institutional bodies that digital assets are safe for long-term investment. When that happens, instead of another ebb-and-flow, institutional money might reach a point of no return.

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Institutional crypto bashers are softening, but time is running out to join in

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