- A new survey disclosed that four out of ten institutional investors will drastically increase their crypto holdings.
- 58 percent of the respondents cited the long-term capital growth prospect of cryptos and digital assets as the reason for increasing their holdings.
Cryptos have been around for more than a decade, but their popularity among mainstream institutional investors was massively recorded since last year. The rising crypto interest among institutions has been confirmed by a survey conducted by Europe’s leading regulated investment manager, Nickel Digital Asset Management. According to the survey, 82 percent of asset managers and institutional investors from the US, UK, France, Germany, and the UAE expect to increase their exposure by 2023.
Nickel Digital mentioned that institutional investors who have Bitcoin and other cryptos in their portfolios have very low exposure to the asset class. Most of them are just testing the market to see how it goes. The survey disclosed that four out of ten institutional investors will drastically increase their crypto holdings, 7 percent will decrease their crypto exposure and 1 percent will sell their entire holdings.
Improved regulatory environment key for institutional investors
Anacholy Crachilov, co-founder and CEO of Nickel Digital commented that corporates and institutional holdings of Bitcoin are growing as confidence in the asset class increases.
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.
According to the report, 58 percent of the respondents cited the long-term capital growth prospect of cryptos and digital assets as the reason for increasing their holdings. 38 percent of the respondents also revealed that they increased their exposure in crypto because they want to become more confident and comfortable in holding the assets. 37 percent of the respondents cited the growing crypto investment among fund managers and corporates as the reason, and 34 percent cited the improved regulatory environment as the reason for increasing their allocation.
According to Crachilov, several other reasons encouraged institutional investors to buy more of the crypto assets.
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.
Recently, Germany passed a new law to allow “Special Funds” to have up to 20 percent of crypto in their portfolio. It is estimated that once every fund allocates the maximum quota to crypto, $415 billion could flow into the industry.
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