Crypto confidence is driving institutional investment, study finds

Long-term investment performance of digital assets is driving increased institutional investment in the sector, according to research.

London-based digital assets hedge fund manager Nickel Digital Asset Management surveyed institutional investors and wealth managers across several countries, revealing that 63% ranked cryptocurrencies among their top five assets for the best risk-adjusted returns over the next five years.

That compares with 60% selecting US equities and 55% selecting European investment grade debt while 54% selected European equities among their top five. By contrast, just 12% selected gold.

Why the funds industry is so bad at creating a utility

The research also found growing confidence in cryptocurrencies among institutional investors, with 37% expecting widespread adoption as an investment within five years and 41% within seven years.

The findings highlighted a shift towards increased exposure to cryptocurrency and digital assets among institutional investors who already have some exposure to the asset class. Currently, only a quarter have 1.5% or more of their assets allocated to the digital asset sector.

Investors foresee “game changer” spot ETFs leading to a 10% Bitcoin surge

However, within three years, nearly 88% estimated they will have 2% or more of their assets allocated to the sector, while around 30% estimated it will be 3% or more.

Anatoly Crachilov, CEO and founding partner at Nickel Digital, said: “As digital assets build a track record of resilience and sustainable recovery, institutional investors are increasingly recognising its
potential as a standalone asset class, well beyond fad, as some were inclined to believe in the past.”
Confidence in longer-term performance is growing, propelled by improving regulatory clarity and the involvement of the world’s largest asset managers. This is reflected in the long-term risk-adjusted return expectation and broader plans of the institutions and wealth managers.”

HAVE YOU READ?

THOUGHT LEADERSHIP

The tension between urgency and inaction will continue to influence sustainability discussions in 2024, as reflected in the trends report from S&P Global.
FIND OUT MORE
This white paper outlines key challenges impeding the growth of private markets and explores how technological innovation can provide solutions to unlock access to private market funds for a growing…
DOWNLOAD NOW

CLOUD DATA PLATFORMS

Luxembourg is one of the world’s premiere centres for cross-border distribution of investment funds. Read our special regional coverage, coinciding with the annual ALFI European Asset Management Conference.
READ MORE

PRIVATE MARKETS FUND ADMIN REPORT

Private_Markets_Fund_Admin_Report

LATEST PODCAST