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Institutional investors plan to buy every Bitcoin price dip, data suggests

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A new survey commissioned by crypto asset insurance company, Evertas, a cryptocurrency insurance firm, found that institutional investors plan to significantly increase their stakes in Bitcoin (BTC) and other digital assets in the future.

After surveying 50 institutional investors that collectively manage over $78 billion in assets in the United States and United Kingdom, a standout response was that 26% of participants believe that pension funds, insurers, family offices and sovereign wealth funds will raise their stakes in cryptocurrency “drastically”.

64% of participants believe the increase in interaction will be moderate, but the group also expects that hedge funds will be more actively engaged in crypto. 32% of respondents believe hedge funds will increase their crypto holdings drastically.

Institutions have a love-hate relationship with crypto

Institutional investors seem keen to invest in Bitcoin and other cryptocurrencies partially because they believe regulations for the crypto market will improve and become clearer in the future.

Others believe that the market will eventually become bigger, providing better liquidity, a feature that most institutional investors require. As the market improves, many also believe there will be a wider range of investment vehicles for institutions to choose from.

The survey also found that there are still many bumps in the road to crypto institutionalization. More than half of the participants said that they are concerned about the lack of insurance for digital assets, while others are worried about the quality of custodial services, trading desks, reporting facilities and the procedures of other companies working in the sector.

J. Gdanski, CEO and Founder of Evertas, told Cointelegraph:

“Our research shows that institutional investors are enthusiastic about increasing their exposure to cryptocurrencies and crypto assets in general, but there are clearly many issues regarding the infrastructure that supports these markets that still concerns them. These clearly need to be addressed if the full potential of investment from institutional investors in crypto assets is to be realised.”

While the outlook on regulating Bitcoin and other established crypto assets may be positive among institutional players, the same may not be true for other sectors of the cryptosphere.

Such sectors include decentralized finance (DeFi) and stablecoins, which have seen massive growth in 2020 and may soon face their own regulatory hurdles.

Institutions ignore Bitcoin’s volatility by taking a bird’s-eye view

While the price of Bitcoin has failed to live up to the post-halving rally that many investors anticipated, institutions remain interested in Bitcoin. Recently, the trading volume for Bakkt’s Bitcoin futures reached a new record of more than $200 million worth of contracts exchanged, suggesting that institutions are still accumulating BTC.

Furthermore, mainstream fund managers are beginning to enter the market, a sign which the majority of the Evertas survey participants believe is a major factor in the institutional adoption of crypto.

Just last week MicroStrategy CEO, Michael Saylor, followed the footsteps of veteran investor, Paul Tudor Jones by purchasing 21,454 BTC. Earlier in the year Jones revealed his stake in Bitcoin, describing the assets as the “fastest horse” with the best odds performance wise.

As investors’ interest in crypto-assets grows and the regulatory landscape for these assets becomes more clear, it’s expected that the wave of institutions flocking to Bitcoin will continue to increase.



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Aave price hits two-month high on Wall Street’s DeFi adoption hopes

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Demand for Aave has boomed dramatically in the previous 24 hours as traders assessed its involvement in Bitwise Investment’s upcoming institutionally focused investment vehicle.

The San Francisco-based asset management firm announced Wednesday that it would invest directly in Aave to back its “Bitwise Aave Fund,” a fund created to build a bridge between accredited investors and the emerging decentralized finance (DeFi) sector.

“There is growing demand from financial advisors, hedge funds, institutions, and other professional investors for exposure to the fast-growing DeFi markets,” Matt Hougan, chief information officer of Bitwise, said in a press release, adding that the investment products would simplify access to DeFi markets for professional investors.

The announcement helped to send the bids for Aave higher across spot exchanges. As a result, the DeFi protocol token surged 9.90% to $333.84 and continued its upside momentum heading into the current session.

Aave eyes a clear bullish breakout above the triangle range. Source: TradingView

It established an intraday high of $372.71 on Thursday, a level it last approached on June 9.

Behind the demand

The latest bout of uptrend pushed Aave’s year-to-date gains a little over 320%, asserting its growth in the emerging DeFi sector. In detail, Aave enables users to earn interest rates on deposits and borrow assets with a stable or variable interest rate option.

The protocol also enables “flash loans,” wherein users can borrow funds for ultra-short durations without needing to provide collateral.

Meanwhile, the token Aave (formerly known as LEND) allows the community to govern the protocol’s ecosystem. In doing so, Aave holders can propose, vote and decide on new additions, features and assets to the protocol.

Additionally, a pre-programmed algorithm burns Aave based on the fees earned by the protocol, thereby ensuring that the token remains scarce in the long run.

As a result, the total value locked (TVL) inside the Aave reserve pools has climbed from $519.9 million to $11.2 billion year-over-year, per data provided by DappRadar. The total outstanding loans issued via Aave also have grown 70 times in the previous 12 months.

Aave TVL in the past 12 months. Source: DappRadar

Ty Young, a researcher at crypto data aggregator Messari, noted that investing in DeFi projects makes more sense for institutional investors than putting capital in Bitcoin (BTC), explaining that protocols like Aave “generate cash flow and have intrinsic value.”

“DeFi tokens’ cash-generating properties allow us to frame discussions about these assets’ worth using traditional valuation methods,” he added.

“As familiar frameworks gain traction and valuation standards coalesce, DeFi assets will gain greater appeal from financial institutions and investors.” 

Part of the reason is the dismissive returns on savings offered by the traditional sector.

Related: Finding the sweet spot: Traditional financial institutions ready for DeFi

According to Bankrate.com, the average interest rate on saving accounts in the United States is just 0.06%. Conversely, DeFi projects offer depositors annualized returns anywhere between 1% and 10% — and sometimes even higher — on U.S. dollar-backed stablecoins, such as Tether (USDT), Dai, USD Coin (USDC), etc.

What’s next for Aave?

A strong fundamental backdrop has pushed Aave to new highs, but its ability to continue its uptrend relies on a technical structure.

As spotted by PostXBT, a pseudonymous market analyst, AAVE/USD wants to break above a stern technical resistance level that constitutes an ascending triangle pattern. As long as the pair trades under the said price ceiling, it could face possibilities of a pullback.

Cointelegraph’s VORTECS™ Score also suggested a bullish outlook as price bounced off the $300 mark. The VORTECS™ Score is an algorithmic comparison of historical and current market conditions derived from a combination of data points, including market sentiment, trading volume, recent price movements and Twitter activity.

Aave price (white) vs VORTECS™ Score (green) chart. Source: Cointelegraph Markets Pro

As seen in the chart above, the VORTECS™ Score for Aave rebounded from 64 (orange) toward 80 (green) on Wednesday, suggesting that more upside is likely.

Aave’s price is currently around $350 at time of publishing.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.