According to a new survey, four out of five institutional investors plan to significantly boost their crypto holdings.
The long-term capital growth potential of cryptos and digital assets was identified by 58 percent of respondents as a motivation for growing their holdings.
Cryptocurrencies have been around for more than a decade, but their popularity among institutional investors has exploded in the last year. A poll done by Nickel Digital Asset Management, Europe’s biggest regulated investment manager, revealed the growing interest in crypto among institutions. According to the poll, 82% of asset managers and institutional investors from the United States, the United Kingdom, France, Germany, and the United Arab Emirates intend to grow their exposure by 2023.
Institutional investors using Bitcoin and other cryptos in their portfolios have very minimal exposure to the asset class, according to Nickel Digital. The majority of them are simply observing the market to understand how it operates. According to the survey, four out of ten institutional investors would significantly expand their crypto holdings, 7% will reduce their crypto exposure, and 1% will sell all of their crypto holdings.
Institutional investors require a more favorable regulatory environment.
Corporate and institutional holdings of Bitcoin are increasing as confidence in the asset class grows, according to Anacholy Crachilov, co-founder and CEO of Nickel Digital.
Our investigation at the beginning of June found that 19 publicly traded corporations with a market capitalization of over USD1 trillion had invested about USD6.5 billion in Bitcoin, after initially spending USD4.3 billion on the cryptocurrency. We also discovered that several bitcoin closed-ended trusts and exchange-traded vehicles have a staggering USD43.2 billion in bitcoin.
According to the report, 58 percent of respondents said they increased their holdings because of the long-term capital growth potential of cryptos and digital assets. In addition, 38% of respondents stated that they extended their exposure to crypto in order to get more confidence and comfort in keeping the assets. Growing crypto investment among fund managers and corporations was highlighted by 37% of respondents as a cause for raising their allocation, while improving regulatory environment was cited by 34%.
Several other factors, according to Crachilov, prompted institutional investors to purchase more crypto assets.
Many professional investors with crypto assets are looking to increase their exposure, owing to a number of factors, including strong market performance during the Covid-19 crisis, more established investors and corporations endorsing the market, and improvements in the sector’s infrastructure and regulatory framework. These tendencies will continue to grow.
Germany has established a new law allowing “Special Funds” to hold up to 20% of their assets in cryptocurrency. It is estimated that $415 billion will flow into the crypto market after every fund allocates its maximum quota to it.
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