Analysts at H.C. Wainwright & Co. believe that large institutional investors are just beginning to invest in crypto ETFs, highlighting the need for regulatory clarity in the industry.

Citing the recent Coinbase State of Crypto Summit, analysts expressed a positive sentiment about the overall crypto industry. They firmly believe that positive momentum is building across the crypto ecosystem, and more investment is on the horizon.

Institutional Interest in Crypto is Growing

The summit, held in NYC, highlighted increased institutional interest in crypto, generating a bullish sentiment on Bitcoin and digital assets. Key topics included the successful launch of spot Bitcoin (BTC) ETFs, the evolution of payments and stablecoins, the tokenization of real-world assets, and the need for better crypto regulation in the U.S.

Spot BTC ETFs: A Significant Rally

Following the approval of spot BTC ETFs, there has been a notable rally for BTC and other digital assets, attracting new investors. Spot BTC ETFs have amassed over $15 billion in total net inflows and manage approximately $63.5 billion in assets, making them the fastest-growing ETF class in history. Coinbase serves as the custodian for about 90% of these assets.

However, around 80% of these inflows come from retail investors. Major broker-dealer and investment advisory platforms are still conducting their due diligence, suggesting that more growth and greater inflows are expected as these products gain broader approval. Analysts noted,

“Expect a tidal wave of institutional inflows when the large wealth platforms approve BTC ETFs.”

Additionally, over $70 trillion in wealth is expected to shift to younger investors — millennials and Gen Z — who are more inclined to invest in crypto than the older generation.

Tokenized Assets: Beyond Just an Asset Class

Traditional financial systems are slow to change, but the broader crypto industry is evolving toward real-world utility, moving beyond just an asset class and store of value.

“Stablecoins settled $10 trillion in total volume in 2023, exceeding total transaction volume for the second largest payment network in the world, Mastercard,” the report stated. A recent survey by Coinbase found that 56% of Fortune 500 companies are actively working on blockchain projects.

BlackRock, the world’s largest asset manager, has tokenized real-world assets on the Ethereum blockchain. The BlackRock USD Institutional Digital Liquidity Fund holds $382 million in assets under management (AUM).

Other analysts believe the global Exchange-Traded Fund (ETF) market could reach $35 trillion over the next decade, including crypto investments.

The Importance of Regulatory Clarity

Proper regulation could benefit the crypto industry and encourage institutional investors to get involved. Recent bipartisan support for the Financial Innovation and Technology for the 21st Century Act (FIT21) in the House of Representatives suggests a more favorable regulatory environment for crypto.

Analysts at H.C. Wainwright are hopeful that clear and thoughtful regulation in the U.S. will positively impact crypto prices and trading volumes by attracting institutional investors who have been waiting on the sidelines due to the lack of clarity.

They reiterated their “Buy” rating of Coinbase Global, Inc. (COIN) with a price target of $315 per share. COIN is currently trading at $238.18.

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