The crypto market is gaining momentum. Among institutional investors buying crypto, you will find such famous names as Galaxy Digital, Tesla, MicroStrategy, Goldman Sachs, JPMorgan, and other prominent players in the financial and technological world. Participation of such giants in the crypto sector spurs other companies to join it. Still, something deters them. What holds Institutional investors back from buying crypto in 2024? This article describes the main concerns and factors impacting crypto investment’ decisions and explains how institutional crypto exchanges like WhiteBIT solve them.
Motivations Behind Institutional Crypto Investment
Institutional crypto investment is driven by the following factors:
- Advanced technologies. Institutions are attracted to the potential for blockchain to revolutionize various aspects of finance and beyond, including smart contracts, DeFi, and tokenization.
- The potential for high returns. Institutional investors, equipped with sophisticated trading strategies and risk management tools, are well-positioned to capitalize on crypto volatility.
- The tool for retaining and attracting clients. For financial institutions such as banks and investment firms, offering crypto trading and investment services can be a powerful tool for client retention and attraction.
- Operational efficiency. For payment processors and financial institutions focused on transaction services, cryptocurrencies are the way to streamline cross-border payments, reduce fees, and shorten settlement times.
Institutional investors can also benefit financially from participating in market-making programs on crypto exchanges like on WhiteBIT https://whitebit.com/market-making-program. They can earn spreads and fees by providing liquidity to these markets, contributing to their revenue streams.
Institutional Crypto Investors’ Concerns
Volatility is the main factor deterring investors from the crypto sector. This market is still young and volatile by nature. While it offers high returns, it also may bring financial losses. To solve this problem, institutional exchanges provide their clients with educational crypto investment resources and offer tools to manage risk (stop loss and take profit orders, limit orders, futures trading tools, etc.).
The crypto market is still not fully regulate, which creates uncertainty for many investors. However, authorities worldwide are developing the regulatory framework to provide institutions with a stable and compliant environment. Crypto exchanges such as the institutional crypto trading platform WhiteBIT, Coinbase, or Binance fully comply with the laws in their jurisdictions, ensuring their investors enjoy a secure trading experience.
Investors are increasingly concerned about cybersecurity risks following numerous successful cyber-attacks and millions of dollars in funds stolen. Investors crypto investment prioritize strong security measures when they enter the crypto market. Regulated crypto exchanges implement secure custody solutions and encryption protocols to safeguard their clients’ investments.
Institutional investors are intereste in the potential of the crypto market; but they still have concerns about volatility, regulation, and cybersecurity risks. Institutional crypto exchanges are addressing these concerns, making it easier for companies to invest in the crypto sector.