Institutional Sector Sees Deeper Correction in Digital Currency Economy in 2022

End 2019 was the time when institutional investors started to join the crypto industry. It was because of institutional investors that crypto-economy skyrocketed from a few hundred billion dollars to more than US$ 3 Trillion. All this transformation and evolution in the crypto economy came in between the period of the end of 2019 to date. The Crypto economy is on the credit of institutional investors such as Microstrategy, Tesla, Square Inc., etc.

Microstrategy, which is a software company, has been one of the top investors in digital currency, especially Bitcoin. The company alone has bought more than a hundred thousand Bitcoins whose value is exceeding US$ 6 Billion. However, currently, the crypto market is underperforming against investors’ expectations. The market is growing a fear that if the situation does not become normal, then it might lose a great deal of institutional support. If this happens, then there is no turning point for the crypto economy to reclaim its lost charm.

In this connection, a survey was executed by Natixis Investment Managers in which 500 entities from the institutional sector were surveyed. These entities were involved in the business of asset and funds management worth more than US$ 13.2 Trillion.

Top officials of these 500 companies were asked about the future outcome of trade markets. All of them responded that they are expecting a major correction to happen in the market soon. Most of them yet shared a common viewpoint that deeper correct is due to take place in the crypto economy. Yet, surprisingly, most of them were seen as having a keen interest in crypto investment.

There were exactly 4 institutions amongst the ten that claimed that crypto could be a possible alternative for the future. Amongst them were crypto investors as well which averaged at least 28% of them all. They claimed that they know inflation will seriously affect the traditional market and therefore they would be investing in the digital economy. Amongst these crypto supporters, 65% were those who claimed that they will not be investing yet will not be selling their crypto assets. While 28% were those who were of the view that they needed to add more digital assets to their crypto holdings.

While 85% of the surveyed companies out of 500 agreed that the digital currency industry will eventually be regulated by central banks.

In 2021, there was huge interest seen in the institutional sector in digital currencies. For instance, the world’s leading institutions such as Goldman Sachs, Bank of America, and JPMorgan Chase too had shown interest. The three leading American investment companies acknowledged that they were missing out on the crypto fad. It is anticipated that huge institutional interest will be seen further in 2023. There are more than 80% of interested companies in the world that revealed their intention of joining the crypto industry in 2023.