Low interest rates boosting institutional cryptocurrency adoption in 2020?


Cryptocurrency adoption and, more importantly, institutional cryptocurrency adaption is what most cryptocurrencies are after. It is indeed a two-way road because, with institutional investors on board, new cryptocurrencies can be formed while the existing cryptocurrencies are leveraged for profits.

A recent survey of almost 800 or so institutional investors was conducted from November 2019 to March 2020 by Fidelity Survey. The survey group comprises institutional investors in Europe and America.

The Fidelity survey report reveals that where American institutional investors are still wary of the cryptocurrency investment, Europeans are more open to the cryptocurrency and buying Bitcoin. About 45 percent of European institutional investors in the survey group owned cryptocurrency as compared to the 27 percent American.

The further findings of this survey depict that Europeans tend to view cryptocurrencies as one of the most desirable classes of digital asset, due to its tendency to avoid interventions from the technocratic and political class.

This phenomenon is not only restricted to institutional investors, rather in 2015, retail investments from Greece reportedly surged for cryptocurrency adoption especially Bitcoin, as this European country found itself deep into financial fallout.

Negative interest rate driving cryptocurrency adoption or institutional sway?

It is no surprise why Europeans feel like this; since 2014, the prolonged lapse into the negative interest rates all across Europe has led to a bizarre bubble-like effect prior to the havoc caused by COVID-19.

Pantheon Macroeconomics conducted a study in 2019, which presented a strong correlation between the decreasing interest rates and the housing prices as the easy credit established a more attractive real estate market with a 16 percent rise in the price of the property in Europe.

Reportedly the European Central Bank; for almost six years, attempted to rid of negative interest rates, albeit to no avail owing to the economic stimulation needs for growth and development.

As negative interest rates penalized the savers, thereby compelling them into placing their funds into the bubbling asset to avoid losing money by staying flat, developing bad debt, and halving the banking industry in Europe.

Banks in Europe had lost around 50 percent of their value when ECB initiated negative interest rates in late 2019. Fractional banking in Europe is under stress, and with the negative interest rates; this stress is getting immense, thereby, creating a vacuum for cryptocurrencies to make its way as the financial alternative. However, to consider low-interest rates a definitive measure for cryptocurrency adoption would also not be a fair assessment.

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Johnson Go

Blockchain enthusiast, project management specialist, writer and crypto investor. JG deals mostly with problems and solutions of crypto projects and provides market outlook for investments. He contributes his analytical skills to projects.

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