Institutional investment in the cryptocurrency space is poised for a massive influx, with hundreds of billions of dollars expected to enter the market in the coming years, according to Devin Ryan, managing director at JMP Securities.
What Happened: In an interview with CNBC, Ryan emphasized that the evolving regulatory landscape and the increasing acceptance of Bitcoin exchange-traded funds (ETFs) are key catalysts for this transformative growth.
"We have research out saying $220 billion of assets are coming into Bitcoin ETFs in the next three years," Ryan said. "If there is a strategic reserve, that could be hundreds of billions of dollars of assets into Bitcoin."
Ryan pointed out that trading volumes for companies like Coinbase Inc. (NASDAQ:COIN) and Robinhood (NASDAQ:HOOD) have surged since the U.S. presidential election.
Coinbase volumes, for instance, have tripled, reflecting growing interest in the sector.
"This activity unlocks a lot of innovation that's been held back," Ryan said, noting the potential for significant growth in payments, remittances, stablecoins, and Web3 applications.
Sarah Kunst, managing director at Cleo Capital, echoed Ryan's optimism, noting that institutional money has been waiting on the sidelines for regulatory clarity.
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Kunst highlighted the new U.S. administration's potentially more favorable stance toward mergers and acquisitions (M&A) as a driver for ecosystem growth.
"I think there are people who have not yet gotten in the game who want to get in the game," she said. "This is really crypto's third act."
Kunst identified key players in the space, including crypto exchanges and infrastructure firms, as potential acquisition targets for larger financial institutions.
"Names like FalconX, the crypto prime brokerage, and Gemini, the crypto marketplace, are likely to attract attention from big acquirers," she stated.
While Bitcoin CRYPTO: BTC) remains the centerpiece of institutional interest, Kunst sees a broadening investment focus. "Meme coins are dangerous—you can make a lot, but you can lose your shirt," she warned.
Instead, she pointed to stablecoins and cryptocurrency ETFs as safer options, especially for institutions unable to hold crypto directly.
Ryan reinforced this outlook, emphasizing the importance of capital flows.
"Follow the flows, and the flows are still coming—we're in the early days," he said.
Beyond Bitcoin ETFs, Ryan expects tens of billions of dollars to flow into other crypto tokens as regulatory uncertainty diminishes, spurring innovation and further investment in the space.
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