The brokerage firm Bernstein advised institutions to start exploring the world of cryptocurrencies and abandon their “zero crypto allocation” strategy.
In a research report released on Monday, the asset manager said the cryptocurrency is poised to move from infrastructure to application thesis in 2023, laying the foundation for a “golden age.”
“For institutional investors who have yet to make a cryptocurrency allocation, 2023 may be the best time to lay the groundwork for a long-term strategy.”
Bernstein said that retail traders have been the main driver of growth in cryptocurrency development to date. “Going forward, we expect institutional investors to drive sector growth with participation in regulated structures,” the analysts wrote. Gautama Chhugani And Manas Agrawal.
Therefore, both analysts believe that there will be significant institutional capital growth opportunities in areas such as conservation, market creation and the first brokerage.
Bernstein analysts specifically expect institutional services opportunities to reach $30 billion by 2033, a compound annual growth rate of 37%. This growth will see cryptocurrency-related custody solutions become an $8 billion market, market making and prime brokerage $8 billion and $14 billion respectively.
Furthermore, the asset manager expects the cumulative revenue of the cryptocurrency industry to increase sixteen-fold over the next ten years, from around $25 billion in 2023 to around $400 billion in 2033. According to Bernstein, “decentralized blockchain revenue” will account for for almost half of that total, compared to just 15% today.
Bernstein also expects blockchain revenues to grow from less than $4 billion today to nearly $200 billion over the next decade, driven by “blockchain scalability innovation,” this technology and the growth of applications in the services segments. finance and consumer technology”.
Decentralized exchanges (DEX), lending and structured/tokenized products are expected to account for the majority of revenue from on-chain financial applications, the broker adds.
As indicated, the World Economic Forum (WEF) said the technology behind cryptocurrencies and digital assets will continue to be an “integral” part of the modern economy. In a report released earlier this month, the organization said:
“Indeed, to test the enduring power of digital assets and blockchains at the heart of financial services (and other areas of the global economy), look at what big banks and mature financial services companies are doing, not what they say “.
The WEF has likened the adoption of cryptographic and blockchain technologies to the adoption of cybersecurity and digital transformation. “Adoption of cryptographic technology is equally inevitable, even if the term seems taboo,” the organization said.
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