eToro on why $2T crypto market cap would draw more institutions

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Recent research from the consulting company Aite Group, commissioned by the eToro trading network, indicates that there are still obstacles to the institutional acceptance of crypto.

“Only by widening the playing field and facilitating more participation will crypto reach and maintain a market cap of $2 trillion and beyond.”

Based on interviews with 25 institutional industry participants, the study notes that the crypto market could hit a market capitalization of $2 trillion if more institutional players wanted to come on board under more favorable circumstances. These companies would be more likely to embrace crypto if there were less regulatory ambiguity, more mature industry technology, and less security risk.

“2020 was the year when many institutional investors such as banks and traditional asset managers began to either invest in crypto or seriously consider doing so, with several touting the asset class — particularly Bitcoin — as an inflation hedge,” said eToro head of business development Tomer Niv.

“Only by widening the playing field and facilitating more participation will crypto reach and maintain a market cap of $2 trillion and beyond.”

The report described other key factors that could bring institutional investors to the crypto sector. They provide a “standardized global regulatory regime” as well as a stable trading framework that could give security to entities that are skeptical of how crypto will be governed within their jurisdiction.

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In addition, the study alluded to “technical complexity” as another obstacle to be addressed. Some participants shared concern about the dangers of keeping private keys, but noted the advantages of crypto cold storage. Niv has added:

“It’s encouraging to see that the next phase of the crypto industry’s evolution is underway with more participation from institutions […] More needs to be done from a market infrastructure point of view to make this group of investors feel comfortable joining the crypto ecosystem.”

Institutional companies also rendered a major contribution to the expansion of the crypto industry in 2020. Business analytics company MicroStrategy’s original $425 million Bitcoin (BTC) bet and subsequent crypto acquisitions last year coupled with digital asset manager Grayscale Investments continuously growing the funds under control led BTC to ever-high prices.

The resulting boom for several tokens resulted in a combined market capitalization in cryptocurrencies breaking $1 trillion for the first time in early January.

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