The cryptocurrency market is on the rise — this is evidenced by the growing interest of institutions and the influx of venture capital into the industry
Crypto exchange Bybit together with Treehouse published a report on the state of the institutional market in 2024. Experts concluded that interest from institutional players and a significant influx of capital caused the capitalization of the crypto market to more than double — from $1 trillion to $2.5 trillion — in the six months until March 2024.
The upcoming Bitcoin halving and optimistic price forecasts for the end of the year are helping to stabilize investor sentiment despite high market volatility. The authors of the report note a confident bullish trend in the cryptocurrency derivatives market and high investment activity in BTC and ETH.
Bitcoin helps hedge risks
Additionally, BTC is gaining popularity as a strategic hedging tool against traditional financial assets (TradFi). Bitcoin shows minimal correlation with major stock indices. If you allocate 5% to BTC and 5% to ETH in your S&P 500 investment portfolio, you can increase your Sharpe ratio by 43.6%.
Comparison of BTC-ETH and TradFi Hedging Effectiveness. Source: ByBit
Venture capital selects infrastructure projects
Additionally, the industry has seen an influx of venture capital (VC). By the beginning of 2024, the volume of funding for projects related to cryptocurrencies reached $1.94 billion. This is 36% more than in the previous quarter. Venture capitalists are particularly interested in infrastructure projects that are critical to the fundamental development of the blockchain ecosystem.
These projects include solutions in the field of hardware wallets and services related to the processing of blockchain data. They are vital to solving industry problems and driving innovation.
Investors are interested in alternative technologies
New blockchains such as Solana (SOL) are also attracting the attention of large investors with rapid growth, outpacing ETH and other “legacy” projects. This shift indicates growing interest and trust in alternative blockchain technologies that promise more efficient transactions and functional decentralized applications. This is especially true in the gaming and artificial intelligence segment.
Cumulative profitability of competing chains. Source: ByBit
Meanwhile, traditional markets continue to integrate with cryptocurrency structures, creating complications for TradFi participants. To remain flexible and competitive, and to take advantage of investment opportunities in the crypto industry, it is important to be able to navigate the rapidly changing cryptocurrency landscape.