Binance Research: Institutions Hold Only 7% of Digital Assets; Much Less Than U.S. Stock Holdings
So far, digital assets are mostly held by private investors, who prefer to lower their activity when prices fall.
Binance Research, the newly created monitoring brand of the Binance Exchange, has noted several key parameters of the digital asset market, showing relatively low institutional engagement. The digital asset market has a very different profile compared to the traditional asset market, where most of the assets are held by business entities.
“An estimated 7% of the cryptoassets are held by institutional investors, which is almost one-thirteenth of the institutional holdings proportion for the U.S. stock market,” Binance Research reported.
Digital assets are held via specially created investment vehicles, as in the case of Grayscale Capital, or cryptocurrency hedge funds.
Cryptocurrencies are also much more active on the markets. The low supply and high trading activity show that for the most active assets, turnover is five times higher compared to the US stock market.
Binance Research also identified indicators that the markets have bottomed out, with gains coming in during this new season, which has pushed Bitcoin (BTC) and altcoins higher. Crypto coins are also extremely price-correlated, depending on BTC price for their movements. Additionally, the Binance Effect was seen as real, with coins and tokens listed on the exchange moving in unison, with a higher correlation among themselves compared to coins listed on other exchanges.
Cryptocurrency investment is mostly personal, performed by retail operators. This is due to the technology itself, which holds no barriers to entry, and the relatively simple usage of exchanges or brokerage services. Binance Research concludes that similar retail participation is only observed in the Chinese stock markets.
“Among the main traditional equity markets, only the structure of the Chinese stock market is somewhat similar to the cryptoasset market——in 2017, retail investors accounted for more than 99.8% of the Chinese stock market by number of accounts, more than 40% by market value, and more than 80% by trading volume,” the research report revealed.
Binance carries $795 million in trading this Monday, although during peak times, trading has exceeded $2.5 billion in 24 hours. The exchange is also holding nearly 800,000 Tether (USDT), offering increasing liquidity and dollar-like price setting.