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Institutional investors are increasingly focusing on cryptocurrencies, a new study shows

Institutional investors are increasingly focusing on cryptocurrencies, a new study shows
Justinas
Baltrusaitis
12 months ago
3 mins read

A new survey conducted 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% expect to increase their exposure between now and 2023, according to Nickel Digital Asset Management (Nickel), a Europe-based regulated investment manager.

The firm commissioned the market research company Pureprofile to interview 50 wealth managers and 50 institutional investors across the US, UK, France, Germany, and the UAE. The survey was conducted online in May and June 2021.

As per findings shared with Finbold.com, four out of ten say they will dramatically increase their holdings. Only 1% said they would sell their entire holdings, and just 7% said they would reduce their exposure.

However, Nickel 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% of respondents. This is followed by 38% 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% cited more leading corporates and fund managers investing in crypto assets because this too is giving them more confidence, and 34% said an improving regulatory environment was also a key factor in increasing their allocation.

Reason for increasing their allocation to Bitcoin and other cryptoassets for the first timePercentage of institutional investors who currently have exposure to cryptoassets who said this is why they will increase their allocation over the next two years
Capital growth in cryptocurrencies58%
Having some exposure to cryptoassets has increased their confidence levels in the asset class38%
More leading corporates and fund managers are investing in cryptoassets37%
The regulatory environment for the sector is improving34%
They provide a good hedge against inflation25%
They offer strong portfolio diversification benefits21%
Custodial services/security around the holding of cryptocurrencies is improving16%
Liquidity of the market is increasingly being established16%
There will be more cryptoassets focused investment vehicles to choose from8%
Nickel Digital Asset Management survey data.

Anatoly Crachilov, co-Founder and CEO of Nickel Digital, commented:

“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 $1 trillion had around $6.5 billion invested in Bitcoin, having originally spent $4.3 billion buying the cryptocurrency. We also found a staggering $43.2 billion worth of bitcoin is held through various bitcoin closed-ended trusts and exchange-traded products.”

Additionally, Mr. Crachilov expressed that “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.”

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Justinas Baltrusaitis
Author

Justin crafts insightful data-driven stories on finance, banking, and digital assets. His reports were cited by many influential outlets globally like Forbes, Financial Times, CNBC, Bloomberg, Business Insider, Nasdaq.com, Investing.com, Reuters, among others.

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