If we had been told five years ago that in just a few years there would be banks offering us the buying and selling of Bitcoin, many of us would have been surprised. Until not so long ago, cryptocurrencies were considered as intangible assets, as an experiment with no real use, and in a way sort of a pyramid scheme.
Today there are coins like Bitcoin with a market capitalization of USD 500 billion, and Ethereum with a market capitalization of over USD 250 billion. That means they are already bigger than the first and second largest banks in the world, ahead of JP Morgan.
They are already been used by institutional investors and even pension funds, as important assets for portfolio diversification. Cryptocurrencies provide 2 attractive ingredients for investors: decorrelation with traditional assets, allowing a decrease in portfolio risk, and on the other hand, a decoupling from traditional currencies, conditioned by political variables, strongly controlled by Central Banks and exposed to trade wars, that affect the profitability of investments.
Over the last 5 years there has been a clear process of consolidation of digital assets, a process that is still at an early stage and which will progress towards a well established, globalised regulatory environment.
In the meantime, giant steps are already being taken in the adoption of these assets, with investment banks and private banks being pioneers in embracing currencies such as Bitcoin and Ethereum in their product portfolios for high-profile investors.
This has been an important step, as thanks to the backing of traditional banks, the cryptoassets are becoming more and more credible. Furthermore, opening up the possibility to the general public of trading with highly reputational entities with more than 100 years of history.
But this is only the beginning. In the coming years, not only EUR or USD will share the investment portfolios, but also BTC, ETH, XRP… and eventually the financial ecosystem will make a new turn with the appearance of the first digital currencies issued by Central Banks (CBDCs).
The consolidation of cryptocurrencies is a reality, and the adoption process of these will come from the hand of technology providers, sometimes allied with financial institutions, which have expertise in operating in financial products for the general public, within strict regulatory frameworks.
