After a particularly volatile week in the cryptocurrency markets, financial media site MarketWatch reported that over a third of wealthy investors are to move into the cryptocurrency market within the end of the calendar year. This could mean good news for current investors in the historically unpredictable and turbulent market.
This news also comes after an especially volatile couple weeks for traditional financial markets. Geopolitical tensions on the in Asia and the European Union sent worldwide markets on a rollercoaster ride that is only expected to continue as American and North Korean officials head into a bilateral summit later this month. This nearly record volatility may make cryptocurrencies seem less risky for certain investors, as several of the major digital currencies have historically responded well to uncertainty in worldwide markets. Investment in the crypto industry would therefore essentially allow traditional investors to have a hedge against potential diplomatic failures over the coming months.
The more widespread use of cryptocurrencies could also mean the introduction of government regulation on the market, which until now has been left largely untouched. Though it may seem unintuitive, many blockchain experts welcome reasonable regulations on the sector, as it will help legitimize the digital coins. However, another potential path for governments would be to ban the technology altogether, likely sending the market into turmoil. Overall, however, these new investors seem to believe that this alternative scenario is less likely, and are moving cash into the sector in droves.
This spells good news for the long term prices of large crypto coins such as Bitcoin (BTC) and Ethereum (ETH), both of which have been strugglin to maintain their prices over the last few months. Already, the market seems to have responded a bit to the trend: Bitcoin is up nearly 5% since Friday and Ether is following closely behind at 4%.
Overall, the fact that wealthy investors are moving into the crypto market means that it is only a matter of time before large financial investment follows. This would mark a significant transformation of the market, making the traditionally fragmentary sector more statutory, secure and stable.