A survey indicates that the majority of institutional traders are hesitant to participate in cryptocurrency trading.

Graw Michael

cryptocurrency

According to a recent survey by JPMorgan Chase, 78% of institutional traders have no plans to explore cryptocurrency investments within the next five years, with only 12% considering trading in this sector. This cautious stance persists despite a buoyant mood in the crypto space, exemplified by bitcoin’s (BTC-USD) 165% rally in 2023, driven largely by speculation around the approval of spot bitcoin exchange-traded funds (ETFs).

Despite a pullback following the ETF approvals, bitcoin found support at around $40K before climbing to $47.3K, showing a pattern of higher lows. This resurgence occurred amidst concerns over U.S. regional banks, highlighted by the financial shock from New York Community Bancorp’s (NYCB) Q4 results, during which bitcoin gained traction as a refuge amid dwindling confidence in traditional banking.

Nevertheless, the volatility of cryptocurrencies seems to deter institutional traders. Following a major bull market in 2021, the crypto sector faced numerous bankruptcies in 2022 amid a bear market, with significant drops in the value of bitcoin (BTC-USD) and ether (ETH-USD).

cryptocurrency

Despite these challenges, the JPMorgan survey, which included 4,010 institutional traders globally, noted a slight increase in crypto engagement to 9% from 8% in 2023. This modest rise may be attributed to the growing interest from traditional financial institutions, with companies like BlackRock, Invesco, Wisdomtree, and Fidelity securing regulatory approvals for their bitcoin ETFs.

SA analyst Kennan Mell suggests that bitcoin’s price trajectory remains uncertain, but factors such as the forthcoming halving event, potential Federal Reserve interest-rate cuts, the prospect of an ether ETF, and positive investor sentiment could fuel further rallies.

Despite bitcoin’s potential for a swift recovery from recent sell-offs, the survey revealed a diminished optimism for blockchain technology in 2024 compared to the previous year, with interest shifting towards artificial intelligence and machine learning as the technologies expected to significantly impact trading in the coming years.