After years of cryptocurrency, institutions finally got into the cryptocurrency market last year and fell right into crypto winter. The collapse of FTX was a knockout blow in an already brutal year. While these are some of the darkest days in the crypto industry, these institutions now have an opportunity – not only to buy bitcoin at deep discounts, but also to reexamine their position and perception of an asset class they may have misunderstood or perhaps viewed differently from now on. there is recent events. Not trusting institutions to keep people’s money safe is at the heart of bitcoin’s design, so it’s no wonder institutions have disliked or trusted it for so long. When they finally saw an investment opportunity, they largely ignored their ideals of bitcoin. “When money is acquired, it’s not just because it’s an indicator of success, but it’s often a human instinct to survive,” said Noelle Acheson, economist at the Crypto is Macro Now newsletter. Head of Market Insights at Genesis. “We’re willing to do that, but that’s not what cryptocurrency was built for.” Now, the rapid opening of FTX is forcing investors to refresh their understanding of bitcoin as they feel that leaving their funds on exchanges like FTX or even Coinbase is riskier than they thought. CNBC spoke to several registered investment advisors who said the FTX collapse doesn’t change their crypto investment thesis, but that it’s time for investors to figure out how best to secure their crypto. “Right now [investors] they’re going back to basics, doing their homework and learning what that means,” says Lyn Alden, founder of Lyn Alden Investment Strategies. “They’re also looking for more regulatory clarity.” year is almost 75% below its all-time high hit. However, they won’t be in a rush yet. “People don’t want to buy a falling knife. “One way to manage risk is to look for stabilization, otherwise it could be a false plateau. They’re watching to see if anything else can shake out.” There is also a great deal of career risk, and what investors do with their personal portfolios may differ from what they do with their institutional portfolios. Alden said he thought it was good. time to buy bitcoin, but he thinks investors should be cautious over the next three to six months. He called it a “long structural opportunity” but in a “difficult environment.” in holding bitcoin exposure in securities such as crypto-related stocks or shares of Grayscale Bitcoin Trust over cryptocurrencies such as bitcoin and ether. The US has not approved a spot bitcoin ETF. “In general, they seem more comfortable getting into it. … The problem is that it’s a very weak industry overall,” Alden said. . but overall this is a place where the normal heuristic of not wanting to accept directional bets can come back to bite them.” Flight to Safety Instead of exiting entirely, institutions in cryptocurrency are here to stay, and there are. According to Mike Belshe, CEO of institutional custodial service provider BitGo, they now want to strengthen their trading and holding practices. “We are seeing significant demand for our core offering – from qualified escrow to proof of reserves to the BitGo Network, which allows customers to store their assets off exchanges and minimize counterparty risk and improve capital efficiency.” Belshe said institutional participation is often lower than it appears, but as demand from retail investors increases, so will their presence. “Most institutions are not yet involved,” Belshe said. “There is huge retail demand and participation. These firms are mainly responding to their customers, and they want to provide better products, services and generate better returns.” For example, last week Fidelity Investments launched commission-free trading for retail investors through a product called Fidelity Crypto. “I didn’t think it was coming for a few more years,” Acheson said. “Seeing Fidelity launch retail-focused crypto products is certainly a huge deal in the midst of one of our worst downturns ever. It’s what’s happening at the bottom because it’s going to ride the tide.” In addition to banks and investment firms, brands such as Nike and Starbucks have also entered cryptocurrency as a distinct group of institutions investing in digital asset strategies. “FTX has destroyed confidence in the industry and may delay traditional financial institutions that have not committed to investing in digital assets,” Belshe said. However, “for institutions and brands already building products in crypto and Web3, we haven’t seen a decline in interest to build, grow and invest.”