Institutional investors do not rush to enter the crypto market

Institutional investors do not rush to enter the crypto market

Although known for its volatility, over the past few months Bitcoin’s evolution has been more downward. Since reaching the record value of $ 20,000, the market has been expecting similar increases, but they have not yet appeared.

Last year, Bitcoin dropped from a maximum of $ 20,000 to a value of $ 3,100. Since then, it has grown to the range of $ 7,000-$ 14,000, where it has fluctuated throughout this year.

Much of the crypto community has pointed out that there are some obstacles to Bitcoin growth.

Institutional investors do not rush to adopt cryptocurrencies

For many years there has been discussion about the entry of institutional investors into the crypto space. Bitcoin properties, such as decentralization and security, make it an excellent investment vehicle. However, the institutions remain hesitant.

There have been some advances in this direction, such as the launch of Bitcoin futures contracts and other derivatives. Many have hoped that the launch of the Bakkt platform will attract investors, but it seems that the process is going hard.

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The main reason why institutional investors don’t rush is that Bitcoin is a new type of investment. Volatility makes it risky, and its future is still unclear.

Another problem is the custody and insurance of cryptocurrencies, a very necessary aspect for companies. Important steps have also been taken in this direction by companies such as Coinbase.

Scalability problems

The Bitcoin network has put its hopes of scalability into layer 2 solutions such as Lightning Network and Blockstream’s Liquid network. However, the development of these solutions has slowed massively in recent months.

For example, Lightning’s network capacity has dropped from 1000 BTC in April to 818 BTC today.
The reduced capacity of the Bitcoin network makes it much less viable compared to VISA.

Market sentiment

Unlike other markets, the price of Bitcoin is highly dependent on market sentiment. Currently, enthusiasm for cryptocurrency is low, which does not make it easier to exceed the $ 10,000 threshold.

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When Bitcoin initially reached $ 20,000, the market hype had reached an explosive level. This has brought many new market participants.

This investment fever is not present on the crypto market at present. The ecosystem is waiting for important news to stimulate a new wave of investments in digital currencies.

Do you think there are other reasons? The comment box is yours!