Institutional Crypto Trading: Motivations and Deterrents

Linda Morrect

Institutional Crypto Trading Motivations and Deterrents

The rise of cryptocurrency investments among institutions started in the 2020s when the most popular assets (Bitcoin and Ethereum) showed historical growth, breaking the previous highs. Since then, institutional-caliber investments have become a pretty real scenario for the cryptocurrency sector. And it did happen:

  • Such tech giants as MicroStargegy and Tesla poured billions into Bitcoin in 2021.
  • Large banks and financial companies started adding trading desks for crypto-oriented clients (JP Morgan Chase registered a trademark for crypto wallets in November 2022).
  • Crypto appeared in payment processing systems like PayPal (October 2020). 

Ultimately, crypto assets once and forever ceased to be a sector for tech geeks and a narrow circle of “crypto believers”, gaining institutional adoption. However, institutional adoption of crypto is still limited. What holds investors back from the crypto sector and what motivates them to join? Let’s find the answers to these questions.

What Do Institutions Expect From An Institutional Exchange?

While the crypto adoption expands, investors require institutional-grade services and tools to manage large amounts in trading. In search for the best institutional cryptocurrency platform, institutions always pay attention to:

  • Compliance with regulations
  • Sufficient liquidity
  • Advanced tools
  • Custody
  • Cooperation and partnerships.

Who are the market makers in crypto? Most often, they are institutional investors or high-frequency traders who inject large amounts into the crypto market, ensuring there are always buyers and sellers for assets. Thus, they are creating an attractive trading environment for other traders and investors.

What Holds Back and What Inspires Investors to Tap Into Crypto Institutional Trading?

Regulatory uncertainty is the main factor holding many companies back from joining the crypto sector. Also, institutions may be deterred by the fact, that the crypto market is still young and lacks maturity. However, many of these issues are being resolved today:

  • There was a notable decision on U.S. vs. Ripple Labs in the summer of 2023, where the judge stated that XRP sales to retailers did not fall into the category of offering securities. The case is not closed but there are already positive shifts.
  • Bitcoin and Ethereum are now traded in the Chicago Mercantile Exchange (CME) as regulated futures products.
  • OTC services for institutional crypto trading and custody services backed by financial companies are actively coming to the crypto sector, raising its credibility.
  • The MICA regulations developed by the EU are aimed at protecting crypto investors and promoting the attractiveness of the crypto sector.


Even though institutional crypto investments have not gotten full-fledged growth yet, they have already reached the tipping point, marking the further growth of institutional crypto allocation. The main contributors to institutional crypto adoption will be the development of regulations and market maturity.

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