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According to analysts from three cryptocurrency exchanges and a crypto lending platform, institutional investors are expected to play a more active role in the cryptocurrency sector by 2024. The anticipated approval of a spot Bitcoin ETF, potential interest rate cuts by the US Federal Reserve, and emerging regulatory clarity are cited as reasons for this shift.
Views from a Company Official
Some analysts believe that this trend has already begun. Data provided by the Deribit derivatives exchange shows a noticeable increase in institutional investor activity since October 2023. Luuk Strijers, the Commercial Director of Deribit, also commented on the matter. According to the well-known figure, experienced participants with a background in traditional markets are already taking positions in anticipation of greater market involvement in 2024.
Luuk included the following in his response:
Since the end of October, there has been a noticeable increase in institutional activities, largely due to the expectations surrounding potential ETF news in January and clients’ strategic positioning for this event.
Potential Approval of Spot Bitcoin ETFs
Analysts at Bitfinex have also made comments. The primary driving force for participation by traditional financial institutions is identified as the approval of a spot Bitcoin ETF.
Some of the world’s largest asset managers, such as Blackrock, Fidelity, Valkyrie, and ARK Invest, continue to compete for the approval of the first spot Bitcoin ETF application by the US Securities and Exchange Commission. A positive outcome of such a financial process would provide institutional investors with a regulated roadmap for transactions based on the price of the world’s largest cryptocurrency.
The initial statement made by Bitfinex analysts was as follows:
The potential approval of Ark Invest’s spot Bitcoin ETF in January could serve as a significant catalyst for Bitcoin’s appreciation, providing both retail and institutional investors with a regulated and more accessible investment vehicle.
Like many analysts, the Bitfinex team also believes that the approval of a spot Bitcoin ETF is highly likely in the first half of January. Predictions are being made for a spot Bitcoin ETF to be approved by January 10, 2024. The analysts clarify that their prediction is based on the latest amendments to ARK Invest’s ETF application, which included additional risk disclosures.
Bitfinex analysts also draw attention to potential interest rate cuts in 2024. They argue that rate cuts could encourage institutional investors to engage in riskier transactions. This enthusiasm for risky assets could propel Bitcoin, the pioneer of all cryptocurrencies, to unexpected heights.
The statement made by Bitfinex analysts was as follows:
A scenario of interest rate cuts could make risky assets like Bitcoin more attractive to institutional investors seeking higher returns in a lower interest rate environment.
