• Crypto prices have rebounded strongly this year, but the space remains barren compared to the pandemic hysteria
• Institutional money has fled at an alarming pace, and there is no guarantee it will return
• Scandals of 2022 were on such a large scale that capital is reluctant to return
Crypto Prices Rebounding
Crypto prices have rebounded strongly this year, with Bitcoin currently trading around $29,000. This rebound follows a dramatic price collapse in November 2021 when Bitcoin peaked at close to $69,000.
Institutional Money Leaving Crypto Markets
Institutional money has left the cryptocurrency industry at an alarming rate since the price collapse and scandals of 2022. Justin Chapman, Northern Trust’s head of digital assets and financial markets expressed his concerns saying „client interest has definitely gone off (a) cliff in terms of institutional interest in cryptocurrencies“. Reports show that since FTX collapsed in November, over half the total stablecoin balance has evaporated from exchanges.
Scandals Impacting Institutional Investors
The events of last year have put a sour taste in the mouth of institutional investors. The scandals of 2022 were on such a large scale that capital is now reluctant to return to crypto markets. This fear is based on reputational damage caused by these events and their subsequent impact on investor confidence.
Despite these fears, optimism around the future path of interest rates has returned since winter and this could be beneficial for crypto prices going forward. Additionally, there are signs that some institutions may be returning cautiously as they seek exposure to digital assets.
It remains uncertain whether institutional money will fully return to crypto markets or if the events of last year have caused irreparable damage to investor confidence. As such, it is difficult to predict how far prices can rise or what impact new regulations may have on investor appetite going forward.