Wall Street's million-dollar Bitcoin transactions surge, retail investors are being marginalized

In recent years, Bitcoin and cryptocurrencies have attracted the attention of Wall Street, with professional institutions managing Bitcoin and crypto assets reporting that they have detected a recent surge in capital inflows from traditional investment markets .

The price of Bitcoin has reached a relatively stable level of around $10,000 over the past 12 months after enduring a long "crypto winter" in 2018.

Currently, according to research from cryptocurrency and blockchain data company Chainalysis, Wall Street institutional investors are increasingly transferring larger amounts of Bitcoin and other cryptocurrencies, and this trend "has just begun."

Institutional investors in the U.S. are driving more crypto asset transfers

“As of June, approximately 90% of North American cryptocurrency transfer volume came from institutional-level transactions, which we categorize as cryptocurrency transactions valued at more than $10,000,” the Chainalysis team wrote in a blog post detailing its findings from its 2020 report on the geography of cryptocurrency transactions.

“In North American trading data over the past two years, we see the influence of a growing number of institutional investors, whose migration has led to the increasing dominance of professional investors in the North American market since December 2019.”

Chainalysis found that North American bitcoin and cryptocurrency transfers of more than $1 million rose from 46% of total value in late 2019 to a high of 57% in May 2020.

Over the same period, the overall professional market share of professional-scale Bitcoin and cryptocurrency transfers increased from 87% to 92%.

“In other words, the growing dominance of the North American professional market since December 2019 appears to be driven almost entirely by transfers and trading volumes above $1 million in value, the majority of which we believe comes from institutional investors,” the researchers wrote.

Bitcoin and cryptocurrency transactions worth more than $1 million surge

Meanwhile, despite announcements from wealth management firms like Grayscale, which manages billions of dollars in Bitcoin and crypto assets, that institutional investors are now coming to the crypto market, the trend may have only just begun.

“Institutional money is only beginning to enter the cryptocurrency ecosystem, so the market is still relatively immature and fragmented,” Kim Grauer, senior economist at Chainalysis, said via email. “The addition of liquidity by large buyers and liquidity constraints lead to greater potential for price volatility and market manipulation. ”

However, Grauer believes that Wall Street’s growing involvement in the Bitcoin and cryptocurrency markets “will help increase transparency and price stability in cryptocurrencies.”

Grauer added: “We expect arbitrage opportunities to close, combining liquidity between exchanges to be a better solution, as well as better price stability and price discovery, and we hope that as regulators and financial institutions better understand the benefits of transparency in cryptocurrencies, they will open up more trust in the space.”