Bull, Bear, and Crypto winter are the 3 key market sentiments of the crypto market, it happened twice but the question is will there be another one? From the 2022 market perspective, a lot happened LUNA Crash, 3AC Capital, Celsius, and the recent crash of FTX.
The idea of regulation and cryptocurrency has, at least in the past, been strongly opposed. where the idea of adding security controls was seen as a terrible idea. However, much has changed in the world of cryptocurrencies since then. Crypto fraud and Ponzi schemes, CEX exploitation made a mockery of cryptocurrency and hastened the need for regulatory management. Today, the people behind the crypto platforms want regulation to help prevent the massive levels of fraud that the industry suffers.
So what makes Institutional Crypto Adoption very important?
1. Institutional crypto adoption pushes crypto regulations
Cryptocurrency is a risky asset, Institutional investors need regulatory assurances around cryptocurrencies to increase their exposure.
One thing this year’s bear market tells us and diminishes from the rest of the bear market is that institutional crypto adoption remains firmly entrenched. Institutional investors are looking at a long-term perspective, they are recognizing the market sentiment and the natural behavior of the crypto industry, rather than stepping back they are using this environment to experience and learn to build in the future.
Institutional investors are pushing for better governance, regulatory clarity, and standards to help make the asset class more accessible, safer, and easier for all to navigate. The crypto industry is lobbying to push for clear regulations: it sees regulations as a positive development that will skyrocket the industry.
According to Aaron Klein, a senior fellow in economic studies at the Brookings Institution who specializes in financial technology and regulation, crypto regulation benefits long-term investors, prevents fraudulent activity within the crypto ecosystem, and provides clear guidance to allow businesses to innovate in the crypto economy.
2. Institutional crypto adoption adds industry value
Institutional adoption of cryptocurrencies will add to increased volumes and trading across the asset class as many different types of investors including traders, long-only, hedgers, and even non-financial users all come together in cryptocurrencies.
Institutional adoption will accelerate crypto to become a mainstream asset class and lead to broader adoption by investors and other users.
It will lead to financial institutions offering crypto to their investors in a wide variety of products from derivatives for hedging and leverage, inflation protection products, and also yield generation products that will compete against traditional fixed-income products.
3. Institutional crypto adoption Web3
More and more companies right now are hoping into Web3.
It’s because of the web3 nature that allows companies to better understand their customer as well as project and manage their data.
The companies who jumped on the Web 3.0 bandwagon first are more likely to win over their users by providing innovative, secure content solutions and a better onboarding experience.
The blockchain network’s smart contracts are crucial to this equation. The conditions of the contract between the buyer and the seller are directly encoded into lines of code because they are self-executing contracts. saving time and reducing disputes, and they are cheaper, faster, and more secure than traditional payment systems.
Not only that the adoption will also lead to many project developments in Web3 and NFT Space.
The recent growth of Web3 was highlighted in a new report from Electric Capital, a venture capital firm that has been investing in Web3 companies since 2018.
According to their report 4,000 new developers committed code to Web3 projects in 2021 — the highest number of developers in history according to the document.
Maria Shen, a partner at Electric Capital, stated “While there are a large number of closed-source developers working in crypto, Web3 is highly open-source. This is the main difference between how companies function in Web3 from Web2. In Web2, everyone is developing privately before the final product is shipped. In Web3, developers are shipping and building in the open.”
Crypto adoption leads to many positive developments not just on its own but could also be use-cases in many industries
