Institutional investors still warming to crypto

Despite a sharp drop in value, and impending regulation, institutions still believe that digital assets are worth investing in.

Institutional crypto interest still increasing

According to a Fidelity Digital Assets Study, institutional interest in cryptocurrencies is still increasing, despite the wide downturn in crypto markets and incoming regulations that will potentially have a dampening effect on the sector.

Tom Jessop, president of Fidelity Digital Assets, is quoted in a Bloomberg technology article as saying:

“While the markets have faced headwinds in recent months, we believe that digital assets fundamentals remain strong and that the institutionalization of the market over the past several years has positioned it to weather recent events,”

The Study

The Study states that the perception of digital assets is positive across the US and Europe, where it has increased by 6 percentage points, while in Asia it has decreased slightly, although this is the region that still has the biggest affinity for digital assets.

The adoption of crypto globally is highest among high-net-worth investors, crypto hedge funds/venture capital, and financial advisors, while lower adoption is seen in other financial segments such as family offices and pensions.

When questioned as to the appeal of digital assets, institutions went for high potential upside as being the biggest factor, with 43% of them saying so. Innovative tech play, decentralisation, and freedom from government intervention were other high percentage reasons.

Plans to make future investments in digital assets rose slightly from 71% to 74% of institutions since 2021, with the amount of US high-net-worth investors looking to purchase digital assets increasing from 31% to 74% year over year.

Price volatility remains the single biggest obstacle to investment in the digital assets sector with 50% of respondents saying this was their biggest issue. This was followed by lack of fundamentals, security concerns, and fear of market manipulation.

The study concludes by citing that 6 in every 10 institutional investors that were surveyed (58%) stated that they were invested in digital assets globally, and that a far deeper analysis of how these investors were interacting with the sector would be needed.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.