In a comprehensive annual survey conducted by banking giant JPMorgan, a significant 78% of institutional traders have indicated no plans to engage in cryptocurrency trading over the next five years. The survey, encompassing inputs from over 4,000 institutional traders, provides a comprehensive view of the evolving landscape of the digital currency sector.

While blockchain and distributed ledger technology (DLT) have been instrumental in shaping the trading landscape, only a small cohort of institutional traders view it as the most influential technology over the next three years. 

The survey reveals a decline in enthusiasm for blockchain technology in 2024 compared to the preceding two years. Artificial intelligence (AI) and machine learning have emerged as the dominant technologies, with 61% of participants foreseeing their significant impact, a notable increase from 53% in the previous year.

In contrast, blockchain, considered equally impactful as AI in 2022, has witnessed a decline, dropping from 25% to 7% in 2024, signaling a shift in technological priorities among institutional traders.

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An Overview of the Decline

The waning interest in cryptocurrency trading among institutional traders aligns with the broader market trend. The early months of 2022 witnessed a cooling-off period for the digital currency sector, following the fervor of the 2021 bull market. 

In the following crypto winter, marked by bankruptcies and market downturns, institutional players took a cautious approach.

Despite the overall decline in enthusiasm, the survey highlights a marginal uptick in the number of active institutional traders in the digital currency sector. Presently, 9% of participants are actively trading crypto, showcasing a modest increase from 8% in 2023. 

Additionally, 12% of traders express intentions to enter the crypto trading sphere within the next five years. Several factors are affecting the sector’s recovery: the entry of financial giants and the emergence of new players 

January marked a pivotal moment with the approval of spot bitcoin exchange-traded funds (ETFs) in the U.S. Institutional investors, including BlackRock, Fidelity, and WisdomTree, gained regulatory approval, signaling a more accommodative environment for traditional financial giants in the crypto space.

The rise in the price of bitcoin (BTC) by nearly 95% in the last twelve months, according to TradingView data, adds to the narrative of a sector on the path to recovery.

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Divergent Views: Coinbase’s Survey and Binance Research Insights

Divergent perspectives emerge when comparing JPMorgan’s findings with a survey conducted by Coinbase in November 2023. 

According to Coinbase’s report, approximately one-third of respondents increased their crypto holdings over the past year, while only 17% decreased them. Notably, 64% of those already invested anticipate an increase in their firm’s crypto allocations over the next three years.

Binance Research analysts, foreseeing significant progress in various areas throughout 2024, including institutional adoption, anticipate an accelerated institutional embrace of crypto. 

The entrance of traditional asset management giants like BlackRock and Fidelity into the crypto space during the bear market is viewed as a testament to their belief in its long-term potential.

Further, according to The Block Research analyst Carlos Guzman, 2024 is poised to be a record year for institutional adoption. The anticipated maturity of infrastructure and new yield opportunities will likely attract more crypto-savvy institutions. 

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Cryptocurrency Ownership and Awareness Surge

Beyond institutional sentiments, a report from Security[dot]org confirms the broader surge in cryptocurrency awareness and ownership rates. An impressive 40% of American adults now own crypto, up from 30% in 2023, potentially accounting for as many as 93 million individuals.

Among current crypto owners, approximately 63% express a desire to acquire more cryptocurrency in the next year, with Bitcoin, Ethereum, Dogecoin, and Cardano topping the list of most desired currencies.