According to a recent survey by JPMorgan, there has been a decline in enthusiasm for blockchain technology. Out of over 4,000 institutional traders surveyed, 78% have no plans to engage in cryptocurrency trading in the next five years. This comprehensive survey provides insight into the evolving landscape of the digital currency sector.
While blockchain and distributed ledger technology (DLT) have played a significant role in shaping the trading landscape, only a small group of institutional traders see it as the most influential technology over the next three years. Instead, artificial intelligence (AI) and machine learning are viewed as the most impactful technologies, with 61% of participants foreseeing their significant impact. This is a notable increase from 53% in the previous year.
In contrast, blockchain technology, which was considered equally impactful as AI in 2022, has seen a decline in enthusiasm, dropping from 25% to 7% in 2024. This signals a shift in technological priorities among institutional traders.
The waning interest in cryptocurrency trading among institutional traders aligns with the broader market trend. After the excitement of the 2021 bull market, the early months of 2022 saw a cooling-off period for the digital currency sector. This was followed by a crypto winter, marked by bankruptcies and market downturns, causing institutional players to take a cautious approach.
Despite the overall decline in enthusiasm, the survey also reveals a slight increase in the number of active institutional traders in the digital currency sector. Currently, 9% of participants are actively trading crypto, which is a modest increase from 8% in 2023. Additionally, 12% of traders express intentions to enter the crypto trading sphere within the next five years.
Several factors are contributing to the sector’s recovery, including the entry of financial giants and the emergence of new players. In January, the approval of spot bitcoin exchange-traded funds (ETFs) in the U.S. was a significant milestone. This allowed institutional investors, such as BlackRock, Fidelity, and WisdomTree, to gain regulatory approval, indicating a more accommodating environment for traditional financial giants in the crypto space.
The rise in the price of Bitcoin (BTC) by nearly 95% in the last twelve months, according to TradingView data, further supports the narrative of a sector on the path to recovery.
However, there are divergent views when comparing JPMorgan’s findings with a survey conducted by Coinbase in November 2023. The Coinbase report shows that approximately one-third of respondents increased their crypto holdings in the past year, while only 17% decreased them. Moreover, 64% of those already invested anticipate an increase in their firm’s crypto allocations over the next three years.
Binance Research analysts also anticipate an accelerated institutional embrace of crypto, with significant progress expected in various areas throughout 2024. The entrance of traditional asset management giants like BlackRock and Fidelity into the crypto space during the bear market is viewed as a testament to their belief in its long-term potential.
Looking ahead, 2024 is poised to be a record year for institutional adoption, according to The Block Research analyst Carlos Guzman. The anticipated maturity of infrastructure and new yield opportunities is likely to attract more crypto-savvy institutions.
Beyond institutional sentiments, there has been a surge in cryptocurrency ownership and awareness rates. A report from Security[dot]org confirms that 40% of American adults now own crypto, up from 30% in 2023, potentially accounting for as many as 93 million individuals. Among current crypto owners, 63% express a desire to acquire more cryptocurrency in the next year, with Bitcoin, Ethereum, Dogecoin, and Cardano topping the list.
