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Bitcoin and the institutional pivot

In June 2023, the price of Bitcoin rose 7% in one day after BlackRock, the world’s largest asset manager, announced its plans for a Bitcoin (BTC) exchange-traded fund (ETF).

The impact on the markets later became known as the “BlackRock pivot”.

The last few months saw a continued increase in institutional interest in cryptocurrencies, driven mainly by the race between many large institutional investors to launch their own version of a Bitcoin spot ETF in the US.

Currently, there are 12 asset managers, including BlackRock, waiting for the Securities and Exchange Commission (SEC) to make a decision on BTC ETF applications.

If these applications receive the go-ahead, analysts say it could lead to a massive inflow of capital into cryptocurrency markets, most notably into Bitcoin.

All of this is happening in what economists are calling a bear market.

Regulation and legitimacy

So, why do institutions care, especially during a market downturn?

In a recent interview with Fox News, Larry Fink, the CEO of BlackRock, said he believes certain cryptocurrencies will serve as a “flight to quality” in the future.

While BlackRock and other asset managers are focussing on cryptocurrency investments, other leading companies such as PayPal have entered the space by creating their own stablecoin, called PYUSD, a cryptocurrency pegged to the value of the US Dollar.

There are many other examples of institutions banking on the long-term growth of the industry.

The ongoing involvement from trusted, traditional institutions will continue to add legitimacy to the industry.

Many experts agree that this will further drive adoption and development of cryptocurrency and its use cases.

Importantly, it will also help establish regulatory frameworks in which the industry can continue to evolve responsibly.

Regulators around the world are in various stages of creating regulatory frameworks to appropriately regulate cryptocurrencies and services providers in the space.

South Africa’s regulators have followed a pragmatic approach, continuing to work with industry stakeholders to create a regulatory framework that will boost confidence among investors, institutions, and the public.

When complete, this framework opens the playing field to institutional investors and their customers.

For businesses looking to join these institutions in their foray into cryptocurrency, Luno offers a user-friendly platform that simplifies cryptocurrency investment.

With secure storage, a wide range of cryptocurrencies, and a seamless interface, we can help you navigate the complexities of the crypto world, whether you’re an institution looking to enter the market or an individual investor.

Investing in Crypto assets may result in the loss of capital. Investing in Crypto assets may result in the loss of capital.

This information is not intended to be nor does it constitute financial, tax, legal, investment or other advice.

Before making any decision or taking any action regarding your finances, you should consult a qualified Financial Advisor.

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Bitcoin and the institutional pivot