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Majority of institutional investors buy crypto because of its ‘high potential upside’

Majority of institutional investors buy crypto because of its 'high potential upside'

Although the cryptocurrency sector has been going through some difficult times since the year’s turn, data has revealed that the interest of investors, especially those on the wealthier end of the spectrum, in its assets is not waning.

As it happens, professional and wealthy investors are still buying crypto assets this year and are interested in buying them in the future, according to an annual survey carried out by Fidelity Digital Assets, CNBC’s Kate Rooney said on October 28.

Specifically, the ‘2022 Institutional Investor Digital Assets Study’ found that six in ten (58%) of institutional investors said they bought digital currencies in the first half of the year, even as Bitcoin (BTC) fell about 60% during the same period.

As the top reason for buying, over 40% of the investors interviewed in Fidelity’s study cited the digital assets’ high potential upside or innovative tech play; interestingly, despite the often-mentioned correlation with the stock market, a quarter of institutional investors believe that crypto is uncorrelated to other assets, which they see as an advantage.

Institutional crypto buyers. Source: CNBC

High-net-worth investors drive the results

Among the buyers, high-net-worth investors are in the lead, with 48% saying they invested in crypto, followed by financial advisors at 37% and family offices at 25%. Pension funds and endowments had the lowest allocation as they tend to be the most risk-averse of the group.

Crypto investment study results. Source: CNBC

On top of that, the study has found that 74% of the high-net-worth respondents said they planned to invest in crypto in the future, representing a substantial increase from 31% year-over-year (YoY).

Asked for a comment on the study results, Fidelity’s Head of Research has told Rooney that these clients tend to be longer-term investors willing to wait for some of those other use cases to play out.

Reasons for (not) investing

As the top reason for buying, over 40% of the investors interviewed in Fidelity’s study cited the digital assets’ high potential upside or innovative tech play; interestingly, despite the often-mentioned correlation with the stock market, a quarter of institutional investors believe that crypto is uncorrelated to other assets, which they see as an advantage.

At the same time, a different study delivered similar results, with a Bloomberg MLIV Pulse survey reporting that 56% of professional investors are still keen on venturing into crypto, despite the United States Securities and Exchange Commission (SEC) intensifying its legal activities in the space.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk. 

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