Crypto on 'Slow and Steady' Pace to Mainstream Adoption – Canaccord Genuity

By: Eliza Bennet

Mainstream adoption of digital assets has been steadily increasing, driven by significant regulatory advancements and rising institutional interest, according to Canaccord Genuity research.

Canaccord's research indicates that the mainstream adoption of digital assets is anticipated to continue driving growth in the sector, positioning companies like Galaxy Digital to capitalize on these evolving trends.

Slow and Steady Adoption

Canaccord Genuity emphasizes that this 'slow and steady' adoption pace is promising for long-term growth. According to their report, recent developments, such as the Securities and Exchange Commission's (SEC) approval of multiple spot Ethereum exchange-traded funds (ETFs), are pivotal for institutional acceptance of digital assets.

This regulatory progress is expected to pave the way for further approvals. Consequently, digital assets are nearing all-time highs, bolstered by incremental regulatory clarity and robust business operations by leading crypto firms.

The growing involvement of crypto in traditional finance is further evidenced by partnerships between crypto companies and major financial institutions. These collaborations signify a deeper integration of digital assets into the global financial ecosystem, reinforcing the trend toward mainstream acceptance.

Galaxy Digital Poised to Benefit

Galaxy Digital, a prominent player in the crypto financial services sector, is well-positioned to benefit from this rising trend of mainstream adoption.

Canaccord Genuity has raised its price target for Galaxy Digital (GLXY) from C$17 to C$23, maintaining a buy rating on the stock. Galaxy Digital's shares closed at C$16.25 on June 7.

The report highlighted Galaxy Digital's strategic positioning and effective business execution as key factors for the positive outlook. The firm has made significant inroads into the ETF market through partnerships with major financial firms like Invesco, DWS, and Itau, expected to drive substantial growth in the ETF space globally.

Additionally, Galaxy Digital served as the exclusive financial advisor in Robinhood's acquisition of Bitstamp, showcasing its robust investment banking capabilities.

The report also points to the potential for Galaxy's Helios mining facility in west Texas to appreciate in value, particularly if the demand for energy-intensive Bitcoin mining from AI companies continues to rise. This trend is exemplified by Core Scientific's recent strategic initiatives.

Canaccord's report also highlighted Galaxy Digital's strong financial position. At the end of Q1, the firm's balance sheet showed over $2.2 billion in equity book value and $1.5 billion in liquid assets.

Canaccord expects Galaxy Digital to continue operating a little above breakeven, which raises the prospects for future growth and profitability.