In spite of a 75% decrease in Bitcoin and substantial losses in other altcoins, institutional investor interest is at an all-time high with regards to cryptocurrencies.
Until recently the cryptocurrency market was in large part driven by retail investors and traders. This is why cryptocurrency markets are susceptible to market manipulation. Cryptocurrencies have a severe liquidity issue as markets move on the slightest bit of news. This has been one of the most substantial criticisms of the cryptocurrency market. Another is the lack of security and the constant hacks of the cryptocurrency exchanges.
As Institutional Investors are introduced to cryptocurrencies, we may see some of these issues resolved. The institutional money would mean a dramatic increase in liquidity and a much lower chance of market manipulation. Institutional Investors would demand the highest level of security which may not be full proof against a hack but most likely mean the holding of crypto assets would be far more secure then it is today.
Even firms like Goldman Sachs are seeing the benefits of offering their Institutional Clients access to Bitcoin even if it is limited to Bitcoin Futures.
Greyscale Investments which is known as a digital currency investment firm recently launched four new funds: Bitcoin Cash Investment Trust, Ethereum Investment Trust, Litecoin Investment Trust and XRP Investment Trust. Coinbase one the leading cryptocurrency exchanges recently announced the launch of a Cryptocurrency Index Fund. All of these new products will help promote institutional investment in cryptocurrencies.
Institutional Investor participation will be vital in the growth of cryptocurrencies as a viable product. While the intent of these products may have been for public consumption there, need to be more significant levels of security as well as increased liquidity which are the two most significant obstacles to the growth of cryptocurrencies.