What are the Major Pros and Cons of Institutional Investors in Cryptocurrencies?

| Updated on February 28, 2024


USD 18000 and counting! That is the valuation of a single Bitcoin in November 2020. The past few months of 2020 have been quite unstable for the most famous cryptocurrency in the world. It has fallen to record lows and risen to astronomical heights, all within a span of a few months.

Many feel that this sudden surge can be attributed to announcements like PayPal’s foray into this space. Others are of the opinion that statements made by big investment billionaires are to be credited with improving investor confidence.

However, whatever be the reasons, there is no escaping the fact that the rise of institutional investors comes with its own set of pros and cons.

Institutional Investors in the Crypto Ecosystems: What you should Know

For a very long time, the leading firms on Wall Street had kept their distance from cryptocurrencies. They felt that Bitcoins and others were some kind of a leading scam, which could hurt their wealthy clients.

However, several efforts, including education, engagement, and workshops, were held to make the system as transparent as possible. This allowed for some traders and investors to start exploring cryptocurrencies like Bitcoins and others.

The biggest advantage these firms have is the size of their capital. Smaller losses are something, which bigger firms can easily stomach. While that scale of money might be too big a number for people like us, for billion-dollar investment firms, it literally amounts to pocket change!

Troubled by falling oil prices and crippling stock markets, some of the more ambitious ones ventured into crypto trading. They soon saw that the price valuations kept sky-rocketing through the roof. This helped them pull in more clients who wanted to get their hands on some Bitcoins at the earliest.

The Top Pros of Institutional Investors in the Crypto Ecosystem

1. Better Stability of Bitcoins-

One immediate impact, which has been felt, is the guard against the volatility of cryptocurrencies. The drastic fluctuations, which were engineered by scared retail investors, have gotten eliminated, leading to a more mature, stable investing environment.

2. More Engagements with Authorities-

For those of you who did not know, Wall Street has Washington’s ears all the time. These firms and individuals command influence over lawmakers in the US Congress. They will never let their investments face sanctions or be deemed illegal. This is great news for more legalization.

3. Mainstreaming of Cryptocurrencies-

As a retail investor, I will feel more comfortable knowing that PayPal is going to handle my crypto-related issues like transfers and trades. This is because companies like PayPal enjoy respect and authority in the industry.

The Top Cons of Institutional Investors in the Crypto Ecosystem

1. Lesser Space for Retail Investors-

Big money in the crypto ecosystem means that trading companies and exchanges are likely to engage with firms more than common individuals. This is because bigger businesses mean better profits for such platforms.

2. Creation of a Monopoly-

Satoshi Nakamoto envisaged Bitcoins to be genuinely decentralized. However, Wall Street’s increasing domination of the crypto space means that this system is converting into the same thing, which it was against since its conception and initiation.

3. Limited Access to Technologies-

In addition to crowding the space around Bitcoins, Wall Street is also paying close attention to firms experimenting with Blockchain technology. Very soon, we are again to witness a scenario where technologies meant for the development of common human beings are being usurped for financial gains.

The Final Word

It should be pointed out that the absence of any overriding authority means that market logic dictates the demand and supply of Bitcoins and other cryptocurrencies. This is what is leading to the price hikes and is something, which is going to continue well into the near future. If you are a retail investor looking to get cracking on Bitcoin trading and investing right away, you can do so immediately at www.bitcoin-pro.live.

Joseph Williams


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