Bernstein Analyst - Institutions Need to Give Up on Zero Crypto Strategies and Start Allocating Now
Brokerage firm Bernstein has advised institutions to dabble into crypto and give up their "zero crypto allocation" strategy.
In a research report on Monday, the asset manager said crypto is poised to pivot from a fat infrastructure thesis to a fat application thesis in 2023, laying the foundations for a decade-long “golden age” of innovation for cryptocurrency applications. The company also said 2023 will be the best year for institutions to create their crypto strategy.
"Get off zero crypto allocation. For institutional investors with no allocation to crypto, 2023 might be the best time to start placing the building blocks for a long-term strategy."
Bernstein said retail traders have been the pushing force behind the crypto development to date. "Going forward, we expect growth to be driven by institutional investors with participation in on-shore regulated structures," analysts Gautam Chhugani and Manas Agrawal wrote.
Consequently, Chhugani and Agrawal believe there will be "massive opportunities" for the growth of institutional capital in industries like custody, market making, and prime brokerages.
More specifically, the analysts at Bernstein expect institutional services' opportunity to reach a staggering $30 billion by 2033, a compound annual growth rate of 37%. The growth will see crypto-related custody solutions become an $8 billion market, with market making and prime broking also growing to $8 billion and $14 billion, respectively.
Furthermore, the asset manager predicts the cumulative crypto revenue to increase by sixteen fold in the next 10 years, from around $25 billion in 2023 to about $400 billion by 2033. Bernstein says that “decentralized blockchain-driven revenue” will account for nearly half of that tally,
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