There is a concern within the cryptocurrency investors community over the entry of financial institutions in crypto markets. The community fears that banks will trigger the next bull market when they gain access to investment money that will dwarf the amount gathered by a group of individual investors who want to keep digital assets away from financial institutions.
However, Binance Research reports that institutional investors only own seven percent of cryptocurrencies all over the world. Binance, which is the world’s leading market analysis team for cryptocurrency exchanges, believes that banks and financial institutions still have a long way to go before they dominate the crypto market.
The report by Binance confirms that institutions are now trying to test the waters of the crypto market, but the sector remains overwhelmed by retail investors. The abundance of retail investors may be a factor of digital assets’ increasing levels of correlation as banks and financial establishments only account for seven percent of Bitcoin and other altcoins.
The report found that there are over 700 crypto funds in operation today which represents a total of a little fewer than $10 billion in digital assets. Assuming that all funds hold only Bitcoin, then less than 15 percent will achieve the famous crypto coin’s total market value. When considering Altcoins in the prediction of investors’ holdings, then banks and institution may have less than seven percent owned in the crypto market.
In this situation, Binance explains that the participation rate of institutions is about one-thirteenth of the current US stock market. However, it remains clear that banks and financial institutions will eventually have a massive capital waiting on the sidelines for potential investments.
However, the report also predicts an alarming event for the crypto market. Despite the possible increase of institutional investors going into the markets, Binance Research believes that the cryptocurrency sector already has a bottom for the long-term run.
The report reveals that the most extended period of the high correlation between aggregated altcoins sector and Bitcoin closed on March 14, ending 90 days of peak correlation. Binance also claims that since the crypto market achieved a maximum level in terms of internal correlations, the trend may spiral downward at a fast rate.
Individual crypto investors may feel like the Binance Research report is positive news since it reveals how little effect established institutions have on the market, but it also shows that it is still in untested stages. It is also alarming for crypto investors that the report includes the possibility of a downward trend.