Institutional investors are the large traditional financial institutions such as JP Morgan, Goldman Sach, Tesla, etc. that bring in fresh money, most notably more than retail. Institutional interest spiked in mid-2020; this reinforced interest can be attributed to the mass adoption and use cases attached to various cryptocurrencies. Over the years, their impact has become evident in top crypto pricing. For instance, around May 2021, Tesla’s decision to reverse payment in Bitcoin contributed to a significant sell-off in the crypto market, contributing to a decline in all crypto prices.
Top 10 Cryptocurrencies by Market Capitalization
Cryptocurrency | Market Capitalization | Current Price |
Bitcoin (BTC) | $725,694,917,798 | $ 36,502.80 |
Ethereum (ETH) | $247,501,989,219 | $2,059.37 |
Tether (USDT) | $86,723,906,722 | $1.00 |
Binance Coin (BNB) | $37,786,940,912 | $248.95 |
Ripples (XRP) | $35,099,521,232 | $0.6537 |
USD Coin (USDC) | $24,154,430,718 | $0.9999 |
Solana (SOL) | $23,333,464,884 | $55.37 |
Cardano (ADA) | $13,371,007,239 | $0.3784 |
Dogecoin (DOGE) | $11,224,125,013 | $0.07927 |
Tron (TRX) | $9,382,076,026 | $0.1058 |
Analysis of How Institutional Investors Impact Cryptocurrency Prices
It’s visible to the blind how institutional investors’ mighty hand can swing cryptocurrency prices’ trajectory. One thing you can not take away from these bigwigs is the significance of capital they bring to the crypto market. Let’s use Bitcoin as an example; this was a highly volatile coin in its early days, known to have price swings regularly. However, the institutional presence started with MicroStrategy, which bought $250 million worth of Bitcoin in August 2020 and an additional $175 million the following month. This liquidity was like a wake-up call that initiated the upward trend of Bitcoin from the startling $6,965.72 to $19,157.16 by the end of November. This is a template that other investors have followed on the other cryptocurrencies.
However, the impact of institutional investment on crypto prices is a double-edged sword. There has been a typical school of thought on how large institutions manipulate crypto prices. The belief was that they perpetrated this by initiating large trades and releasing market-moving news. This act often increases or reduces cryptocurrency’s price, giving those institutions an advantage. A popular example of this was Dogecoin crypto price manipulation by Elon Musk. He was accused of using his massive Twitter presence to drive the Dogecoin price up by 36,000 percent over several years and let it crash.
Impact of Institutional Investors on Cryptocurrency Prices: Closing Thought
Institutional investment in cryptocurrency is not going away. Even they are more of a blessing than a curse in this regard. Their liquidity has increased and stabilized top cryptocurrency prices more than what might have ever been achieved with ordinary retail crypto trading. However, we can’t discard the deeds and shenanigans of some unscrupulous elements who have tried to game the window of opportunity. The impact of institutional investment in cryptocurrency prices has been a blessing to the industry.