Institutional investment in cryptocurrency is “unstoppable”, how crazy will the market get?

Institutional adoption of cryptocurrencies is growing and accelerating, with major institutions entering the industry and Bitcoin becoming a more common investment method.

In an interview with Cointelegraph, Stephen Stonberg, CEO of Bittrex Global, said that the crypto industry is no longer in its infancy.

“I think we are past the early adoption stage of crypto. Cryptocurrency is now mainstream. Adoption is in double digits in both developed and developing countries. There is even one country that has adopted Bitcoin as legal tender, and many other countries are considering adopting Bitcoin as legal tender,” he said.

“We’re also seeing big changes on a business level,” Stonberg said, before citing recent developments with AMC and Venmo in crypto. By 2022, if all goes according to plan, AMC moviegoers should be able to pay for their tickets with Bitcoin. Venmo recently announced a new feature that gives users of its Venmo credit card the option to place their cash back rewards directly into crypto assets.

Earlier this year, MicroStrategy was the first US company to invest its treasury in Bitcoin, and CEO Michael Saylor has since been seen as an influential figure in the Bitcoin community within corporate America.

One year after MicroStrategy invested in Bitcoin, it holds a total of 105,000 Bitcoins.

In recent years, Visa has established partnerships with 50 companies including Coinbase, Circle and FTX, allowing users to easily use cryptocurrencies on the Visa payment network. This means that even in merchants that do not accept cryptocurrencies, users can smoothly use the related payment services provided by Visa.

American life insurance company MassMutual has partnered with crypto financial services provider NYDIG to provide financial professionals and investors with access to Bitcoin funds. MassMutual made a $5 million equity investment in NYDIG last year and invested $100 million in Bitcoin for its general investment account.

More and more institutions are ready to take action, with traditional financial institutions such as BlackRock, Goldman Sachs, Morgan Stanley and JPMorgan Chase setting up Bitcoin funds and services in the past few months, or admitting to considering turning to cryptocurrencies. Financial services company TP ICAP announced that it will launch a crypto trading platform with financial giants Fidelity Investments and Standard Chartered Bank.

According to a research report by blockchain market intelligence agency Blockdata, 55 of the top 100 banks by assets under management (AUM) have some form of exposure to crypto and blockchain risks, either directly by the banks themselves or indirectly through their subsidiaries in crypto and decentralized ledger technology companies.

The study lists Barclays, Citigroup and Goldman Sachs as the most active backers of crypto and blockchain companies, with JPMorgan Chase and BNP Paribas identified as serial investors in the emerging space.

The study also shows that crypto custody is a major focus for banks as they delve deeper into the crypto space. In fact, nearly a quarter of the top 100 banks by AUM are either developing crypto custody solutions or supporting startups that provide custody services for digital assets.

Several banks in the United States, Asia and Europe are building crypto custody platforms as part of their initial forays into cryptocurrencies.

Blockdata attributes banks’ growing involvement in crypto and blockchain to three main factors: surging profits from cryptocurrency startups, regulatory advances, and growing demand from bank clients for exposure to digital assets.

However, concerns about Bitcoin’s potential environmental harms, a crackdown by Chinese regulators on Bitcoin trading and mining, and a recent drop in computing power on the underlying blockchain network appear to have given some big investors pause.

Another concern is that the Federal Reserve may tighten monetary policy to fight inflation. The prospect of rapidly rising consumer prices following trillions of dollars in central bank stimulus has been a major source of demand for bitcoin.

Institutional demand for Bitcoin is surging amid the coronavirus crisis, with multibillion-dollar Bitcoin and crypto asset manager Grayscale reporting its largest quarterly inflows ever, nearly $1 billion.

Institutional investors (primarily hedge funds) accounted for 84% of Grayscale’s Bitcoin and cryptocurrency fund investments in the second quarter of 2020, up from 81% in the previous 12 months. New investors accounted for 57% of Grayscale’s investor base this quarter, up from 49% in the same period last year.

“Grayscale is not creating demand, it’s reflecting demand for this asset class,” Grayscale research director Philip Bonello said on an investor call after Grayscale released its second-quarter report.

The cryptocurrency market transaction volume has exceeded 16 trillion US dollars, exceeding the annual transaction volume of Facebook, Apple, Amazon, Netflix and Google. How can institutions not be tempted by such a huge piece of cake?