Corporate Adoption of Cryptocurrency Remains Low Despite ETF Launches
Summary:
Despite the approval of the first Bitcoin ETFs, corporate adoption in the cryptocurrency sector is still low, according to Marc Degen, co-founder of Trust Square. Comparing financial inflows, Degen highlighted that traditional finance continues to dwarf digital assets, with JPMorgan receiving over eight times the inflows of all U.S. Bitcoin ETFs combined. He attributed lagging digital asset adoption to a predominant lack of trust in the crypto market, with more people placing faith in centralized rather than decentralized exchanges. He stressed the need for corporations to boost confidence in this sector. A single examination of Bitcoin ETF inflows is inadequate to measure institutional adoption, with Grayscale’s Bitcoin Trust accounting for most outflows.
Despite the launch and approval of the first Bitcoin Exchange-Traded Funds (ETFs), there is still a lack of corporate trust and engagement in the cryptocurrency sector. The initial authorization of Bitcoin ETFs in the U.S. was hailed as a significant milestone for the crypto sector, as it meant the introduction of the first publically traded Bitcoin products.
However, Trust Square co-founder and chair Marc Degen says that the level of corporate involvement in this sector is still relatively low, terming it as "amateur league." During his Web3 Corporate Innovation Day address, Degen compared the inflow of funds into Bitcoin ETFs with that of traditional finance. He noted that despite the excitement over Bitcoin ETFs, which have attracted around $60 to $70 billion so far, this amount paled compared to financial institutions like JPMorgan, which received $489 billion in net new client inflows in 2023 alone. This is over eight times the total inflows into the eleven U.S. Bitcoin ETFs.
The slower uptake of digital assets is primarily pegged to the general lack of trust in the industry, with a 2023 Pew Research Center study revealing that about 75% of individuals familiar with crypto feel unsure about the dependability and safety of these digital assets. Degen states that corporations are key to fostering this trust. He also highlights that those new to cryptocurrency have a tendency to trust centralized exchanges (CEXs) more than their decentralized counterparts, judging from the trading volumes on both. For instance, in the past 24 hours, the total trading volume on decentralized exchanges was $3.86 billion, which is around a fifth of the $17.6 billion trading volume amassed by Binance, the world's largest CEX.
Analyzing Bitcoin ETF inflows alone doesn't provide a comprehensive account of institutional adoption since their inception. This is because Grayscale’s Bitcoin Trust ETF (GBTC) was responsible for most of the outflows, drastically affecting the overall amount of cumulative ETF inflows. To date, Grayscale’s GBTC has offloaded more than 18,207 BTC totaling over $1.19 billion.
Published At
6/17/2024 2:30:12 PM
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