Institutions Urged to Allocate Crypto Assets: Bernstein Predicts $400B Opportunity


• Brokerage firm Bernstein has advised institutions to start allocating crypto assets rather than adopt a “zero crypto allocation” strategy.
• The analysts at Bernstein expect institutional services‘ opportunity to reach a staggering $30 billion by 2033, a compound annual growth rate of 37%.
• Bernstein predicts that the cumulative crypto revenue will increase by sixteen fold in the next 10 years, from around $25 billion in 2023 to about $400 billion by 2033.

Brokerage firm Bernstein has offered advice to institutional investors, urging them to give up their “zero crypto allocation” strategy and start allocating crypto assets. According to a research report released by the asset manager on Monday, the development of cryptocurrencies is transitioning from a fat infrastructure thesis to a fat application thesis in 2023, paving the way for a decade-long “golden age” of innovation in the crypto space.

The report argued that 2023 will represent the ideal time for institutions to establish their crypto strategies. “Get off zero crypto allocation. 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,” Bernstein said.

Analysts Gautam Chhugani and Manas Agrawal of Bernstein noted that retail traders have been the primary drivers of crypto development thus far. Going forward, however, they anticipate that growth will be propelled by institutional investors who are participating in on-shore regulated structures. Consequently, the analysts believe there will be “massive opportunities” for institutional capital to flow into industries such as custody, market making, and prime broking.

Chhugani and Agrawal forecast that institutional services’ opportunity will reach a whopping $30 billion by 2033, with a compound annual growth rate of 37%. They predict that crypto-related custody solutions will become an $8 billion market, with market making and prime broking achieving $8 billion and $14 billion, respectively. Moreover, Bernstein anticipates that the cumulative crypto revenue will skyrocket sixteen fold in the next 10 years, from around $25 billion in 2023 to approximately $400 billion by 2033.

The asset manager concluded that with institutional capital set to take the driver’s seat in the crypto space, the industry is preparing to enter a new era of innovation. “As institutional investors move into the ecosystem, we expect a ‚golden age‘ of crypto applications to start in 2023 and last for the next decade. We are entering the era of ‚fat applications‘,” the report concluded.