Trust of Institutional Investors in the Crypto Industry Continues

Institutional investors continue to show interest in the industry, amid the FTX controversy

The negative effects caused by the FTX debacle have placed the crypto space in an unfavorable light. However, institutional investors continue to show interest in the cryptocurrency industry, even at the height of the FTX controversy.

According to crypto exchange Bitstamp, institutional registrations within its digital asset trading platform were up 57% in November — when the topic of the FTX collapse frequented news headlines — compared with October. The exchange also told Cointelegraph that its total revenue was up 45% in the same period, with revenue coming from institutions up by 34% and from retail traders up by 72%.

The exchange also highlighted that active global retail users in November also increased by 43% compared with October, with United States-based users up by 18%. This suggests that even with FTX being a hot topic in the space, more crypto investors were actively trading on the exchange.

For years, the idea that traditional financial institutions would invest in bitcoin (BTC) was laughable. But as of mid-2020, the institutional presence in cryptocurrency became a reality. Many cite the foray of "the suits" into crypto as a contributing factor to the latest bull run that began in late 2020 and ended in late 2021.

Institutional interest in the cryptocurrency market excites current investors because institutions bring in fresh money, and certainly more money than retail can pour in.

Bitcoin, the largest cryptocurrency by market cap, is the gateway – and indeed the only stop – for many institutions that ventured into the cryptocurrency market. As of June 2022, 6.47% of all bitcoin that will ever exist is held by institutions, a broad category that includes ETFs like VanEck in Canada and sovereign governments like El Salvador.