Currency security report: institutional investors hold less than 7% of cryptocurrency

Financemagnates April 15reportsA new report by Binance Research says institutional investors own less than 7% of all cryptocurrencies.

The expectation of an influx of institutional capital into cryptocurrencies has long been seen as one of the catalysts for rising prices. According to the report, there is much more scope for institutional investment growth in cryptocurrencies than most people think -- with only a third as much cash as in traditional stock markets.

Binance studies market trends that may result from the dominance of retail investors in the sector. "The extreme correlations that occur frequently in cryptographic markets are inextricably linked to the high level of retail-driven participation in the market," the report said.

Binance found a correlation between the rise in bitcoin prices and adjustments in the prices of competing currencies (and vice versa). The data shows that when the correlation between [bitcoin and competing currencies] reaches a certain positive upper limit, around [0.8-1.0], bitcoin's moves against the dollar tend to reverse, or at least halt, previous price moves.

The report acknowledges that this correlation pattern should not be seen as a reliable price forecasting strategy. "Given the short history of cryptographic markets, it may be premature to say that there is a causal relationship between spikes in correlation and market reversals, or that there is a herding effect during market reversals," the report explains.

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