Analysts from three crypto exchanges and a crypto lending platform predict that institutional investors will play a more active role in the cryptocurrency sector by 2024. They attribute this to the expected approval of a spot Bitcoin ETF, potential interest rate cuts by the Federal Reserve, and clearer regulatory frameworks.
According to data from Deribit, a derivatives exchange, there has been a noticeable increase in institutional activities since October 2023. Deribit’s Commercial Director, Luuk Strijers, suggests that experienced market participants are already positioning themselves for greater involvement in 2024.
Strijers noted that the uptick in institutional activities is largely driven by expectations surrounding potential ETF news in January and strategic positioning by clients for this event.
Analysts at Bitfinex view the approval of a spot Bitcoin ETF as the primary catalyst for traditional financial institutions’ participation in the crypto market. Major asset managers such as Blackrock, Fidelity, Valkyrie, and ARK Invest are competing for the approval of the first spot Bitcoin ETF by the U.S. Securities and Exchange Commission.
Bitfinex analysts believe that the approval of a spot Bitcoin ETF by Ark Invest in January could significantly boost Bitcoin’s value by providing a regulated and accessible investment vehicle for both retail and institutional investors.
Most analysts, including the Bitfinex team, anticipate the approval of a spot Bitcoin ETF by mid-January 2024, basing their predictions on recent amendments to ARK Invest’s ETF application that included additional risk disclosures. Furthermore, Bitfinex analysts point to potential interest rate cuts in 2024, which could entice institutional investors to engage in riskier transactions, potentially driving Bitcoin to unprecedented levels.