April 19, 2024
Crypto Fund Management Market Could Grow to $500 Billion in Five Years, Says Bernstein
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Crypto Fund Management Market Could Grow to $500 Billion in Five Years, Says Bernstein

The crypto fund management market is presently valued, according to Bernstein, between $45 and $50 billion, but it has the potential to grow to over $500 billion in assets within the next five years.

In a research note published on Monday, analysts expressed their opinion that the cryptocurrency sector is on pace to “transition from a cottage industry ($50 billion of managed assets) to a formal, regulated asset management industry with $500-650 billion of assets over the next 5 years.”

According to Bernstein, demand would come from wealth and private banking products, investment advisors, and the ease of access to bitcoin ETFs in direct broker accounts.

“This would imply a 10% ETF share for bitcoin and ETH market caps and a 5-6% share for liquid crypto hedge funds,” they stated.

Two courts have ruled with cryptocurrency businesses, or partly-sided, in the case of Ripple due to the bitcoin ETF filings from conventional giants Blackrock, Fidelity, and others.

Bernstein now claims that it believes that “the chances of an approval by early 2024 have significantly increased, and thus [they] like the risk-reward setup from here” as a result of the Grayscale case, in which a panel of judges asked the SEC to review Grayscale’s application to convert its Bitcoin Trust (GBTC) to a bitcoin ETF.

The SEC postponed a series of judgments on bitcoin ETFs to October or late August.

Analysts predict that the SEC will take the “middle route” and feel comfortable with the monitoring sharing contract with Coinbase rather than “inventing another reason for refusal,” given that the proposals are coming from established fund managers and the contracts are with regulated exchanges like Nasdaq.

“The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein,” the SEC stated at the time. It postponed judgments on, among others, Blackrock, Fidelity, Ark, Bitwise, and VanEck.

Franklin Templeton disclosed their offer for a spot bitcoin ETF after the delay.

Stablecoins have led to tokenization potential with payment uptake, according to Bernstein analysts.

“The use case has been largely crypto trading and DeFi markets, with no major integration with mainstream payment platforms and networks. We believe the real opportunity in stablecoins today is in their transformation from offshore-unregulated crypto to onshore, regulated, and more direct utility around mainstream payments and global settlement,” analysts concluded.

Image: Unsplash

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