‘Mature’ cryptocurrency market to draw more institutional traders this year, analyst says

The value of cryptocurrencies has plunged more than 50 per cent this year, but some analysts are upbeat the asset class will grow more popular and mature this year, with a gradual increase in trading volume and decrease in volatility.

The catalysts include regulatory clarity that could attract institutional investors into a market currently dominated by retail players.

The market capitalisation of cryptocurrencies reached US$261.6 billion on Sunday afternoon, reflecting a drop of 57 per cent since the beginning of the year, according to the CoinMarketCap.com.

That follows a 34-fold increase in 2017, underscoring the incredible volatility of the budding industry.

Last year’s market was “irrational”, largely due to the lack of regulatory oversight and institutional investment, said Adrian Lai, founding partner Orichal Partners, a cryptocurrency investment firm in Hong Kong.

But he expects more regulation which will reduce market manipulation and volatility, and encourage institutional participation.