Yearender 2021: Cryptos Gain Acceptance From Big Investors Despite Its Volatility
Cryptos remain volatile but big investors such as wealth managers, ETFs and other institutional investors are including cryptos in their portfolios.
Time and acceptance are chipping away at the volatility of cryptocurrencies, say experts. Bitcoin, for instance, has been around for more than a decade. As an asset class, it is gradually inching towards maturity and wild volatile swings will soon be a thing of the past. In addition, there are many coins as of now and investors are driving prices based only on speculation. As investor awareness increases, the selection process will also improve, thus, reducing the role of speculation.
In the meanwhile, big investors have put their weight and expertise behind cryptocurrencies.
Acceptance has also strengthened due to the introduction of cryptocurrency exchange-traded funds (ETFs). Crypto futures ETFs have made a debut on the US markets with the ProShares Bitcoin Strategy ETF. Trading on the exchange started on October 19, 2021. It got an overwhelming response and at the end of Day 1 of trading, the futures ETF surpassed $1 billion in volumes to become the second-most traded ETF among all types of ETFs on its first day.
The success of the Bitcoin futures ETF is also due to the fact that it has something in common with more traditional investments — the brokerage accounts are protected by the Securities Investor Protection Corporation (SIPC). Australia’s regulator has also approved spot ETFs in Bitcoin and Ethereum.
“They (ETFs) will ensure better price discovery and draw more participation from institutional investors, thereby paring volatility to a significant extent,” says Sharat Chandra, a blockchain and emerging technology expert and advisor to blockchain startups.