The entrance of the institutional market at the end of 2017 has led cryptocurrency traders through an emotional rollercoaster, from gigantic gains to tremendous losses. The market kept bleeding until it found its low in February 2018. Analysts predict there will be a surge in institutional demand this year, which could drive again prices to new highs.
Institutional Traders May Drive Next Bullish Momentum
Institutional investors may be about to board the cryptocurrency market with new added strength as governments and central banks produce more regulatory clarity regarding the asset class, which removes uncertainty. With institutional traders moving in, the current market share dominated by retail players is likely to be reduced.
Adrian Lai, co-founder of Orichal Partners, a cryptocurrency investment firm in Hong Kong, points to lack of regulatory oversight and institutional investment as the reason for irrational behavior in the market. More regulation reduces market manipulation and volatility, and attracts institutional participants. “Regulators are not banning the development of cryptocurrencies, but are trying to better regulate the market, which should help the industry mature,” Lai said. “If the regulatory stance gets clearer, large funds will be more assured and willing to commit significant capital”, he added, as he notices a significant increase in interest from asset managers and private banks.