Published: July 9th, 2021
Two new surveys suggest that wealth managers, institutions, and hedge fund executives already holding digital assets plan to keep going, adding more crypto to their balance sheets and funds under management in the near term.
A survey conducted by UK-based Nickel Digital Asset Management found that more than 80 per cent of those polled expect to grow their digital asset exposure between now and 2023.
The poll of 100 wealth managers and investors was conducted in May and June. Respondents reported prior exposure to crypto assets in the UK, France, USA, Germany and the UAE.
Forty per cent said they would ‘notably add to their holdings,’ with just 8 per cent saying that they planned to limit or reduce their crypto exposure. Just one per cent had plans to liquidate their digital holdings.
Nickel’s survey did find that, to date, most institutional investors have low levels of crypto asset exposure, possibly testing to market to understand how it operates in practice.
In the future, however, 57 per cent said they would invest in crypto assets for their long-term capital growth prospects. Despite the recent market slump, bitcoin (BTC) is still up 18 per cent so far for the year to date, while ether (ETH) has jumped by 214 per cent since the start of the year.
Close to 37 per cent of those surveyed said that gaining experience in crypto asset trading increased their confidence in the asset class. Another 36 per cent mentioned a broader shift by other fund managers and investors to buy crypto assets as encouragement to invest further.
In a press release accompanying the data, Nickel Digital analysts commented that confidence in the crypto asset class is rising.
‘Our analysis suggests that at least 18 listed companies with a combined market capitalisation of over USD 1 trillion have already invested close to USD 6.4 billion in bitcoin alone.’
Another survey of traditional investment firms that don't currently trade in cryptocurrency found that one in five think they will hold crypto on their books in the near future.
The survey of more than 3,400 investors by JP Morgan found that 10 per cent of respondents work at firms that invest or trade in digital assets, while 90 per cent do not.
However, more than double that proportion seem ready to invest in crypto, a signal that Wall Street money may keep flowing into crypto markets over the near term.
Of the firms that don’t deal in crypto, 20 per cent of respondents said they believe their companies will join the march of traditional investors into crypto markets very soon.
Many analysts believe that sustained institutional buying has to continue if the price of bitcoin is going to rise back up to the USD 50,000 watermark reached in May this year. However, a large number of investors from traditional finance still have concerns about cryptocurrencies.
Asked if they were pro or con on crypto as an asset class, 13 per cent answered that it was too uncertain and ‘something to avoid’, while 20 per cent thought digital assets were just a fad. Only 6 per cent of respondents agreed with the statement ‘crypto will eventually be one of the most important assets.’
Security worries top the list of concerns, with 97 per cent of those surveyed stating they believe fraud is a standard feature in crypto markets.
That isn’t stopping big corporate investors like MicroStrategy and Tesla, with both parties pouring billions into cryptos this year. While Teals has since walked back its enthusiasm due to environmental concerns around crypto mining, MicroStrategy recent increased its BTC holdings by 27 per cent, raising the amount of bitcoin held to 90,529 BTC.
In the eight months since MicroStrategy announced its first USD 250 million buy of bitcoin, the company has been on a spree, growing its hoard to more than USD 4 billion.
On the retail investor front, another recent survey suggests that British currency traders and individual investors have got crypto fever, with many more willing to buy cryptocurrencies than equities and stock-backed assets.
A survey by London investment firm AJ Bell found that 8 per cent of British respondents said they’d purchased crypto in the previous 12 months, compared to just five per cent who invested in stocks or (equities-backed) individual savings accounts (ISAs).
The survey polled 1,250 individual investors. Analysts at AJ Bell said the results ran counter to popular perceptions.
The poll turned up interesting demographic trends as well. UK crypto investors tend to be males under the age of 35. Two-thirds of those who had bought crypto assets claimed to have seen a profit. Oddly, close to twenty per cent said they didn’t know how their crypto investments had performed.
The finds contrast sharply with earlier research from London-based think tank Parliament Street, which revealed in march that 52 per cent of individual British investors said they would be more inclined to invest in traditional assets like gold and equities rather than cryptocurrencies. Nearly a third said that investing in crypto would be a waste of time and money, as they believed the ‘ship had already sailed’ on bitcoin and ether as investment opportunities.
The Telegraph newspaper quoted another AJ Bell analyst saying that the research showed how much more confident and knowledgeable younger people are when it comes to investing in non-traditional finance. They understand the technical complexities and the risks, displaying more sophistication than even senior finance professionals.
The research followed a 12-month stretch that saw substantial growth in crypto trading volume in the UK, alongside the launch of new crypto offerings from fintech companies like Revolut, all pointing to a general uptick in investor desire for digital currencies.