Institutional Interest Brings Adoption and Conflict to Crypto

By Juan Villaverde

Brace yourselves, the crypto bull market is making a grand entrance. Even better, everything is set to take off in 2024.

And the big difference we’ll see in this bull cycle that’ll separate it from the previous is institutional investment.

Sure, the last cycle showed TradFi institutions starting to take the crypto market seriously. But that involvement was just a few select companies and the involvement didn’t go much further than blue-chip crypto projects.

But right off the bat, this bull market showed a key change. The recent crypto frenzy was kicked off by rumors of a spot Bitcoin (BTC, “A”) ETF. My colleagues have covered before what this means, but just to recap, a spot Bitcoin ETF would grant access to Bitcoin to an entire new investor class, including many institutions that cannot put Bitcoin on the books directly … but can own a Bitcoin ETF through the stock market.

While analysts at Bloomberg have put the likelihood of an approval at 90%, the anticipation has everyone on the edge of their seats. It’s like watching a predictable yet thrilling season finale where crypto finally gets the mainstream embrace it’s been craving.

And institutions in particular are eyeing crypto like it’s the last piece of cake at a party. The potential for Bitcoin and Ethereum (ETH, “B+”) ETFs is just the appetizer. Next up, those companies will be diving deep into the world of altcoins, building infrastructures and turning their businesses into blockchain fan clubs.

As someone with a background in macroeconomics and who’s been in the crypto market since the early days, it’s like watching the cool kids finally acknowledging the nerds at school.

But wait, there's a plot twist.

The U.S. Government, in a dramatic showdown, has just slapped Binance with a $4.3 billion fine. Former CEO Changpeng Zhao, aka CZ, is now out of the Binance picture.

It’s clear that as crypto becomes mainstream, the centralized governmental powers have realized they can’t stop it. So, the conversation is no longer about who gets to play in the financial sandbox. It’s about who controls the rules inside the sandbox.

See, as crypto bulks up, it becomes a bit of a threat to the TradFi system by undercutting its authority through its decentralized nature. Remember, central banks have always been able to control monetary policy for their fiat currencies. And before this, no one has had the ability to opt out of that market. Crypto is building toward being able to offer an alternative outside any centralized authority, which makes central banks’ jobs much harder.

While the Securities and Exchange Commission is handing over Bitcoin keys to the Wall Street bigwigs via the ETF approvals, it's showing Binance the door.

But let's not get all gloomy. This could be the start of something more legit.

Traditional crypto businesses might need to brace for a bit of a regulatory storm. That’s not entirely a bad thing, as we have seen a push for smart regulation — rules and parameters that don’t hinder crypto but allow it to interact with TradFi more easily. But the potential for too much governmental oversight will come into conflict with crypto’s core nature.

Despite this, I’m still considering this clash a positive because the fact that governments are even batting an eye at crypto means it's already too big to be ignored … or shut down.

This whole saga is a bit like the U.S.-China relationship. Once a friendly trade partnership, now it’s all about who gets the upper hand. DeFi and TradFi are heading down a similar path from buddies to frenemies.

In the end, blockchain technology and decentralized networks are poised to outshine the old-school financial systems. They’re like the underdog in a movie that everyone roots for. And every time the Federal Reserve hits the print button, more people jump onto the crypto bandwagon.

The writing is on the wall: A massive shift from traditional debt markets to alternatives like gold and crypto is underway.

It's the dawn of a new era, and you don’t want to miss this train.

So, keep your eyes peeled and your crypto wallets ready. The revolution won’t be televised, but it will definitely be written in real time on the blockchain.

The question is, will you be there, too?

If you’d like to be, I recommend learning more about my Weiss Crypto Investor newsletter. Each month, I break down the narratives driving the market and send you specific “Buy/Sell” recommendations for top-performing cryptos every investor should have in their portfolio.

You can find out more here.

Best,

Juan Villaverde