According to experts, institutions will become more involved with cryptocurrencies in 2020. The launch of Bitcoin ETFs and diversified investment strategies is predicted.
The analysts of Vision Hill, a firm specializing in digital assets, expect 2020 to be one of the best years for cryptocurrencies. The company predicted that institutional investors will be more involved, with a larger number of capital and human resources investments.
Through a report, the experts stressed that 2020 can become a year for the maturation of the ecosystem. They consider that there are an increasing number of companies that invest capital in digital assets, including Fidelity, ErisX, and Bakkt. Therefore, they believe that next year there will be new products, updates on pre-existing systems, and new investment strategies.
The report indicates that their encouraging forecast is not based on an increase in the price of crypto assets. The firm notes that it is very difficult for the cryptocurrency market to enter a bullish trend without a break. However, it believes that the ecosystem’s success will be demonstrated by the consolidation of a more sophisticated and more liquid market.
Vision Hill forecasts that there will be a larger institutional offer in 2020, since institutional investors remain interested in the cryptocurrency ecosystem. In this regard, experts believe that cryptocurrency trade will be more diversified.
Traditional and Disruptive Practices
The document notes that an increase in financial products focused on Bitcoin is expected. It is known that a large part of traditional investors prefer investing in stocks with the lowest possible risk, especially when cryptocurrencies are involved.
Institutional investors usually calculate or determine an indicator called Beta Market when the behavior of a stock helps predict the growth of the market in general. According to Vision Hill, some investors assume that Bitcoin can be a beta market or a cryptocurrency market maker.
The firm expects that Bitcoin exchange-traded funds (ETFs) will be able to break into the market next year. The US Securities and Exchange Commission (SEC) has postponed the approval of these funds on several occasions, but the experts predict that some of them will be released.
Likewise, the report predicts that next year financial companies will make more risky bets in the crypto market. The incorporation of specialized investment strategies for well-performing assets will allow them to start getting involved with assets other than Bitcoin. Analysts believe that institutional investors will begin to calculate the Alpha market of the cryptocurrency industry in order to assess the level of performance of a stock and the best cryptocurrency investment.
Some traditional market practices applied to the crypto market are the use of arbitration, long trade operations, high frequency trading, peer-to-peer (P2P) trading and market synchronization. Besides, the analysts assume that the investment in cryptocurrencies will be diversified and institutional investors will acquire more knowledge in 2020. Software engineering, generalized mining and DeFI platforms are practices that companies are studying to better understand the crypto market.
To conclude, Vision Hill experts say that venture capital companies will also play an important role in the ecosystem. It should be noted that this type of companies have injected significant capital into the cryptocurrency industry in recent years, favoring game startups, analysis tools and investment services.
By Willmen Blanco