As evidenced by various interviews, Twitter comments, and data sets, institutions have finally started to enter the cryptocurrency market en-masse. Wall Street’s focus thus far has been Bitcoin.
But an analyst expects institutional players to expand their horizons to include top altcoins in the future, citing data from exchange Coinbase regarding the behavior of investors.
Institutions could leap to altcoins after dabbling in Bitcoin
In a blog post published on May 13, leading cryptocurrency exchange Coinbase indicated that while Bitcoin is by far the most popular digital asset on the platform, it acts as a sort of “gateway drug” to altcoins.
Their data found that out of all the accounts registered in 2019-2020, “with at least 5 purchases on Coinbase.com,” a mere 24 percent stick exclusively with investing in Bitcoin, while the rest “eventually buy other assets” — or altcoins.
According to Messari’s Ryan Watkins, the propensity that Coinbase users have to migrate to altcoins over time rather than sticking with Bitcoin might be reflected in institutions “over time”:
“Bitcoin is by far the leading cryptoasset and perhaps the most important, but Coinbase customer data shows that new users generally begin to look for alternative assets and use cases. […] I imagine institutions will behave similarly over time.”
Ethereum seems to be the most obvious bet after Bitcoin, especially since it just got its first U.S.-regulated futures contract and since the project is being supported by companies like Reddit, IBM, and more.
Bitcoin remains the best crypto bet
While there are already some institutions delving into altcoins, as evidenced by Grayscale’s Q1 2020 investment report that signaled enormous hedge fund support for Ethereum, institutional players themselves have said that Bitcoin is the best bet when it comes to cryptocurrencies.