Blending traditional finance (TradFi) with digital assets has been a key trend in the last two years. Ironically enough, much of the recent surge in the crypto world is being driven by the very traditional financial institutions that cryptocurrencies were initially meant to challenge, according to the new report released by Bybit, a major cryptocurrency exchange.
The ‘2024 Institutional Industry Report’ is published today in partnership with Treehouse Finance. It offers a detailed analysis of global cryptocurrency adoption and its implications for traditional finance.
The data shows a major leap in the cryptocurrency market cap between October 2023 and March 2024, jumping from a bit over $1 trillion to over $2.5 trillion. This jump shows that investors are feeling more confident and are pouring a lot of money into the crypto world.
There has been a bullish trend in the derivatives market and increased on-chain activity for Bitcoin (BTC) and Ethereum (ETH). The report also highlights institutional investment patterns that show a growing interest in AI and BTC ecosystem projects.
Key observations include a notably bullish sentiment in the derivatives market for Bitcoin and Ethereum in March 2024, despite overall market stability. The two major coins, often seen as hedges, showed low correlations with traditional asset classes like stocks and bonds. This just cements their role as tools for diversifying investment portfolios.
Specifically, adding just a small slice of cryptocurrencies to an S&P 500 portfolio could boost its Sharpe ratio. This indicates that mixing in some crypto could improve the portfolio's returns when adjusted for risk, highlighting the benefits of diversifying into digital assets along with traditional stocks.
The report also noted the decent performance of tokens from challenger chains, such as Solana, which have begun to outperform ETH in terms of total value locked and transaction volume.
In terms of venture capital, the crypto sector saw a comeback in funding, especially in the last quarter of 2023 and the first quarter of 2024. There was a notable increase in funding, with infrastructure, gaming, and AI projects getting the lion's share of investments.
This influx of capital is crucial for supporting the fundamental elements of the blockchain ecosystem and driving innovation, the report concludes.