Drop zero crypto policy Bernstein tells institutions

Quick Take

  • Bernstein analysts said 2023 might be the best time for institutions with zero crypto allocation to “start placing the building block for long-term strategy.”
  • The asset managers says crypto revenue could increase about 1,600% to around $400 billion by 2033. 

Bernstein has some advice for institutions: Get some skin in the game. 

"Get off zero crypto allocation," the asset manager told institutions following the publication of its global crypto revenue pool model for the next decade. "For institutional investors with no allocation to crypto, 2023 might be the best time to start placing the building blocks for a long-term strategy."

Analysts at Bernstein expect revenue to grow to $400 billion by 2033 from less than $25 billion today — an increase of more than 1600%.

To date, crypto has mostly been driven forward by retail investors and off-shore regulations, the note said. "Going forward, we expect growth to be driven by institutional investors with participation in on-shore regulated structures," analysts Gautam Chhugani and Manas Agrawal wrote.

Based on this, Chhugani and Agrawal said opportunities in custody, market making and prime brokerages present "massive opportunities" for the growth of institutional capital in crypto. 

The asset manager expects institutional services' opportunity to grow to $30 billion by 2033, a compound annual growth rate of 37%. The growth will be driven by custody solutions ($8 billion), market making ($8 billion), and prime broking ($14 billion).

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