Institutional Crypto Adoption on the Rise, Predicts Decreased Bitcoin Volatility

By: Eliza Bennet

An increasing number of institutional investors establishing a presence in the crypto space is predicted to result in a significant decrease in Bitcoin's volatility, according to Bitwise CIO Matt Hougan. The report outlines a future in which Bitcoin could achieve mainstream acceptance and become a staple in investment portfolios. Hougan predicts that by 2028, Bitcoin allocations in diversified investment portfolios could reach or exceed 5%, an expectation supported by increased comfort with and understanding of Bitcoin's maturing market.

In tandem with this prediction, a survey conducted by KPMG in Canada revealed a marked uptick in the adoption of crypto assets among institutions. According to the survey, the number of financial firms offering crypto products and services increased by 22% from 2021. The escalating adoption trend is also witnessed among institutional investors incorporating crypto into their portfolios, which rose by 26% over the same period.

These trends coincide with increased institutional investor interest in spot Bitcoin ETFs, fostering a stabilizing influence on the market. The growing acceptance of Bitcoin in the financial sector is further evident through the recent launches of Bitcoin ETFs and similar products, which have performed remarkably in early trading periods.

Despite the optimistic outlook, the future of Bitcoin and cryptocurrencies at large remains subjected to associated risks, including market volatility and regulatory uncertainties. The hope is that with increased institutional involvement and stringent regulations, these risks will be managed, ensuring the sustainable growth and widespread adoption of cryptocurrencies.