Emily Walker
After discussions with a range of US investors, Bernstein analysts have observed that many are increasingly optimistic that “crypto is back.”
This renewed interest follows a political shift during the Trump administration, raising questions about the potential effects on the digital asset landscape.
Led by Gautam Chhugani, Bernstein’s team noted that while this enthusiasm exists, a comprehensive grasp of the evolving regulatory landscape is still developing. Nonetheless, it is evident that investors are gearing up for greater engagement.
Regulatory Changes and Interest from Institutions
Bernstein pointed out a wide interest from investors across traditional finance, technology, payments, and crypto sectors.
There is a notable readiness to delve into crypto-related equities—from exchanges to AI-powered mining—as well as a keen interest in Bitcoin pricing and stablecoins, especially in light of changes in US legislation.
Additionally, new participants from fixed income and convertible markets are becoming more engaged, with strategies from MicroStrategy drawing significant attention.
The analysts identified several regulatory developments that could influence the cryptocurrency space. Key factors include President Trump’s executive orders on strategic digital asset reserves and the possibility of the SEC rolling back regulations that restrict US banks from holding digital assets.
If these changes occur, they could lead to increased institutional involvement and greater liquidity. Bernstein predicts a substantial rise in corporate Bitcoin acquisitions, estimating annual volumes could double by 2025.
Despite the widespread interest, Bernstein notes that institutional investors are currently neutral regarding Bitcoin’s price movement. Rather than taking strong bullish or bearish positions, there seems to be a tendency to observe the market. Equity investors are particularly focused on crypto-related stocks as many still find direct investments in spot Bitcoin to be out of reach.
Growth in Corporations and Stablecoins
Investor conversations have also highlighted the shifting role of stablecoins, which could reinforce the US dollar’s position in the digital finance sector.
Bernstein anticipates that upcoming legislation on stablecoins will boost their use in areas like cross-border transactions and remittances, as banks and fintech companies pursue revenue and integration opportunities presented by these assets.
Within corporate discussions, Bernstein noted MicroStrategy’s influential role in Bitcoin-linked financial markets. While some may see the company’s substantial Bitcoin exposure as high-risk, Bernstein argues that its strategy—issuing convertible debts and preference shares—has played a pivotal role in fostering institutional Bitcoin use.
Anticipating that more corporations will adopt similar strategies, Bernstein expects total corporate Bitcoin investments to soar to $50 billion annually by 2025. The firm is optimistic about several companies that are positioned to thrive alongside crypto’s growth, including Robinhood, Riot Platforms, and Core Scientific.
These companies are viewed as well-suited to capitalize on the increasing momentum in the digital asset realm, spurred on by clearer regulations, institutional involvement, and innovation in stablecoins.
Featured image created with DALL-E, Chart from TradingView