36% of large institutional investors own digital assets such as Bitcoin, according to a survey from Fidelity Investments which also runs a service that trades and secures digital assets. Tom Jessop, president of Fidelity Digital Assets said,
“These results confirm a trend we are seeing in the market towards greater interest in and acceptance of digital assets as a new investable asset class.
This is evident in the evolving composition of our client pipeline, which spans from crypto native funds to pensions.”
Investors in Europe are more likely to own digital assets
Across the US and Europe, a third of the survey’s 774 respondents said they own cryptocurrencies or derivatives. In Europe, 45% of institutions — including pension funds, investment advisers, family offices, and hedge funds are invested in digital assets.
In the US, only 27% of the surveyed 393 institutions said they own digital assets. Interestingly, 59% of these US investors are invested directly and only 22% have done so via futures. Although just over half of Europe’s, interest investors in the US has increased from 22% a year ago. “Europe is perhaps more supportive and accommodating,” said Jessop which could
“be just things going on in Europe right now, you got negative interest rates in many countries. Bitcoin may look more attractive because there are other assets that aren’t paying return.”
Bitcoin continues to be the digital asset of choice
The survey was conducted by Greenwich Associates between November 2019 and early March, right before the market crashed.
Over a quarter of the respondents hold Bitcoin while only 11% are holding Ether. In 2020 so far, Bitcoin is up 32% while Ethereum has gained 86%. After tumbling during the COVID-10 pandemic triggered sell-off, crypto assets have rallied.
Besides price, the survey also noticed that over the last year, there have been incumbent service providers and increasing coverage by the mainstream financial firms, all of which contribute to the upward trend seen in institutional investors’ digital asset ownership.
Volatility the main concern impeding adoption
There is still a lot of scope for growth here as almost 80% of investors surveyed find something appealing about the asset class.
Interestingly, while 25% of European investors find the fact that certain digital assets are free from government intervention to be appealing, only 10% of investors in the U.S. feel this way.
91% of those open to exposure to digital assets in the next five years expect to have at least 0.5% of their portfolio allocated to them.
The majority of institutional investors feel digital assets have a place in their portfolio while 40% believe it to be an alternative asset class and 20% as an independent asset class.
The survey found that price volatility was the top concern followed by market manipulation and lack of fundamentals to gauge appropriate value hindering digital assets' wider institutional adoption.
But according to Jessop, these issuers are largely those that will “resolve themselves as the market infrastructure evolves.”