• Brokerage firm Bernstein has advised institutions to invest in crypto and move away from the “zero crypto allocation” strategy.
• The asset manager expects the crypto-related industry to reach $30 billion by 2033, with custody, market making and prime broking becoming an $8 billion, $8 billion and $14 billion market, respectively.
• Bernstein also predicts the cumulative crypto revenue to increase by sixteen fold in the next 10 years, from around $25 billion in 2023 to about $400 billion by 2033.
Institutions have long been hesitant to invest in the cryptocurrency space, but on Monday, one of the world’s leading asset managers, Bernstein, urged them to give up their “zero crypto allocation” strategy and get in on the action. In a research report, Bernstein predicted that the crypto industry will pivot from a fat infrastructure thesis to a fat application thesis in 2023, laying the groundwork for a decade-long “golden age” of innovation for cryptocurrency applications.
As such, Bernstein has advised institutions to start implementing their crypto strategies in 2023. According to the report, retail traders have been the main force behind crypto’s development to date, though going forward, it expects growth to be driven by institutional investors participating in on-shore regulated structures. Consequently, Bernstein believes that there will be massive opportunities for the growth of institutional capital in industries such as custody, market making, and prime brokerages.
Specifically, the asset manager believes that the opportunity for institutional services will reach $30 billion by 2033, with a compound annual growth rate of 37%. This growth will see crypto-related custody solutions becoming an $8 billion market, with market making and prime broking also growing to $8 billion and $14 billion, respectively. Furthermore, the asset manager predicts that the cumulative crypto revenue will increase by sixteen fold in the next 10 years, from around $25 billion in 2023 to about $400 billion by 2033.
To capitalize on these opportunities, Bernstein is urging institutions to create their crypto strategies as soon as possible. The asset manager believes that 2023 is the best time for institutions to get off the “zero crypto allocation” strategy and start building the blocks for a long-term strategy. It is clear that the next decade will be a crucial period for the crypto industry, and institutions that fail to invest now will be missing out on a huge opportunity.