During previous bitcoin bull markets, institutional use of digital assets was often said to be a likely factor. With the biggest cryptocurrency and its brethren faltering this year, some market participants are wondering if institutional investors are out of the market.
Institutional Case for Bitcoin, Crypto Still Cogent
Indeed, bitcoin prices have been fluctuating this year, but there are clear signs that institutional investors remain committed to crypto. In the long term, increased institutional use of digital assets can be a positive catalyst for exchange-traded funds, including VanEck Bitcoin Strategy ETF (XBTF )it VanEck Digital Assets Mining ETF (DAM )and VanEck digital transformation ETF (DAPP ).
This week alone, there is evidence of some well-known institutional players getting involved in the crypto arena.
“Prices held steady even after two major announcements that signaled that institutional acceptance and adoption of crypto continues to build despite the bear market. On Tuesday, Google announced that it would explore using Coinbase’s service for storing and trading cryptocurrencies. On top of that, BNY Mellon said Tuesday it will add cryptocurrencies to the various assets it holds as a custodian,” Tanya Macheel reported for CNBC.
Coinbase (NASDAQ:COIN), which operates the largest crypto exchange, is the largest shareholder DAPP with a weight of 8.48%. That ETF has a number of crypto-correlated stocks, including Coinbase, bitcoin miners and more traditional but still crypto-exposed fintech companies.
Although it is positioned as a play on digital asset miners – and it is – DAM also has exposure to Coinbase. The share is the ETF’s eighth largest component with a weight of 4.77%.
In addition to the more extensive cases of digital assets and crypto-correlated stocks are other recent cases of institutional adoption.
“Over the past month, Nasdaq also launched crypto custody for institutions, and Franklin Templeton, Betterment, Société Générale and other asset managers have made forays into crypto,” according to CNBC.
Although these headlines have not yet had a significant impact on the prices of ETFs such as DAM, DAPPand XBTF, which may be more a symptom of the macroeconomic environment than a lack of institutional enthusiasm for bitcoin. Translation: Inflation and rising interest rates, which propel the US dollar, are among the primary headwinds facing bitcoin and its peers this year. Despite this headwind, high-level investors are wading into crypto, and that can be evident to retail investors.
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