Study shows institutional investors are increasingly focusing on cryptocurrencies and digital assets
A new survey of institutional investors and wealth managers from the US, UK, France, Germany, and the UAE who currently have exposure to cryptocurrencies and digital assets, reveals that 82 per cent expect to increase their exposure between now and 2023.
Four out of 10 say they will dramatically increase their holdings, while only 1 per cent said they would sell their entire holdings, and just 7 per cent said they would reduce their exposure.
However, Nickel Digital Asset Management (Nickel), a European investment manager dedicated to the digital assets market, which conducted the study, says in most cases institutional investors with holdings in bitcoin and other cryptocurrencies have very low levels of exposure as many have just been testing to market to see how it works.
The main reason given for investing more in digital assets is the long-term capital growth prospects of cryptocurrencies and digital assets – the view cited by 58 per cent of respondents. This is followed by 38 per cent who said it is because having some exposure to crypto assets means they have become more comfortable and confident in holding the asset class. Some 37 per cent cited more leading corporates and fund managers investing in crypto assets as a reason as this too is giving them more confidence, and 34 per cent said an improving regulatory environment was also a key factor in wanting to increase their allocation.
Anatoly Crachilov, co-Founder and CEO of Nickel Digital, says: “The number of institutional investors and corporates holding bitcoin and other crypto assets is growing and their confidence in the asset class is also increasing. Our analysis at the start of June this year revealed that 19 listed companies with a market cap of over USD1 trillion had around USD6.5 billion invested in bitcoin, having originally spent USD4.3 billion buying the cryptocurrency. We also found a staggering USD43.2 billion worth of bitcoin is held through various bitcoin closed-ended trusts and exchange traded products.
“Many of those professional investors with holdings in crypto assets are looking to increase their exposure and this is being driven by several factors including strong market performance during the Covid-19 crisis, more established investors and corporations endorsing the market, and the sector’s infrastructure and regulatory framework improving. These trends will continue to expand.”