Tech
Institutions Are Bullish on Challenger Chains, Tech VC Funding Spikes
The cryptocurrency market is witnessing a profound renaissance, as highlighted by Bybit’s Institutional Industry Report 2024, developed in collaboration with Treehouse.
This analysis highlights the growing global adoption of cryptocurrencies and its dynamics with traditional finance (TradFi). Over the six months ending in March 2024, the cryptocurrency market capitalization rose from just over $1 trillion to as much as $2.5 trillion, driven by renewed institutional interest and substantial capital inflows.
Investor sentiment is high for BTC and ETH as derivatives show bullish trends
The report outlines a notable upward trend in the derivatives market and active investment movements in on-chain parameters for BTC and ETH. As these primary cryptocurrencies show rising call premiums despite market fluctuations, investor sentiment remains solid, particularly with the upcoming bitcoin halving and the potential bull run into 2024.
Furthermore, BTC is gaining traction as a strategic hedge against TradFi, showing minimal correlation with major stock indexes. Incorporating a modest allocation of 5% each into BTC and ETH can improve the situation Sharpe ratio of an S&P 500 portfolio by 43.6%, underlining the potential of cryptocurrencies as diversification tools within investment portfolios.
BTC-ETH TradFi Hedging Comparison. Source: ByBit
Venture capital (VC) investments in the sector are also seeing a significant increase. As of early 2024, reported funding in cryptocurrency-related ventures reached $1.94 billion across 243 deals. Related to a 36% increase compared to the previous quarter. This revival of venture capital interest is particularly focused on infrastructure projects crucial to the fundamental development of the blockchain ecosystem.
To know more: What happened at the last Bitcoin halving? Forecast for 2024
These projects include advances in hardware wallets and blockchain data services, which are critical to addressing industry challenges and driving innovation.
Challenger chains like Solana (SOL) they are also attracting attention, with their tokens outperforming established players like ETH. Which is reminiscent of their rise in 2021. This shift indicates growing interest and confidence in alternative blockchain technologies that promise improved transaction capabilities and decentralized applications. This is especially true in the gaming and artificial intelligence sectors.
As traditional markets continue to integrate with cryptocurrency frameworks, the complexities for TradFi participants and newcomers increase. Staying informed and agile is essential to navigate this rapidly evolving landscape, with institutions and investors increasingly poised to capitalize on the growing opportunities in the cryptocurrency sector.
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