Over the past year we’ve seen headlines regarding certain investors buying Bitcoin or ETH, and that’s been a nice narrative. Behind the scenes, the institutions that manage the overwhelming majority of global investable assets have gone from uninterested, to exploratory and most recently to a period of deeper due diligence. In 2022, we will start to see the culmination of that diligence as billions in new capital flow into a digital assets market that is still in its infancy.

 

Terms like AltCoins, used to describe literally anything that isn’t Bitcoin, will fall by the wayside as more sophisticated capital enters the market. While I do believe that Bitcoin will continue to grow and increase in value vs the dollar, true institutional investors are not looking at this as a macro or beta play, but as an investment allocation to a growing technology that spans a broad swath of sectors and industries. This will lead to an adoption of terminology and taxonomies that fit within our existing investment landscape.

 

The majority of financial advisors have been slow to present their clients with a thoughtful digital assets exposure plan. While those at the wirehouses will likely continue to fall behind, advisors with more flexibility in their models will be adding active management strategies, including both liquid and venture capital, to their clients’ investment allocations. This will continue to put pressure on the banks, as well as the slow-moving RIA custodians.

 

2022 will serve as further proof  that digital assets is part of a secular shift, not a short-term trade. As institutional capital enters the market in exponential fashion, the marginal buyer will far outpace the marginal seller.