The third of large institutional investors in the United States and Europe hold digital assets like Bitcoin or Ethereum.
Over a third (36%) of almost 800 institutional investors across the United States and Europe are investing in digital currencies like Bitcoin or Ethereum. Furthermore, 6 out of 10 respondents believe cryptocurrencies have a place in their investment portfolio, revealed the latest digital assets survey by Fidelity Investment.
The survey, conducted within last November and March 2020 included financial advisors, family offices, pension funds, cryptocurrency and traditional hedge funds and large individual investors.
Digital asset ownership
As the investment company reported, European institutional investors outrun their American counterparts and currently account for 44% of digital asset owners. Meanwhile, in the United States, only 27% of surveyed institutional investors currently hold Bitcoin or Ethereum, the two leading cryptocurrencies by market capitalization.
As the survey revealed the highest interest for digital assets is coming from cryptocurrency hedge and venture funds. However, the demand from financial advisors, individual investors, and even family office segments are also increasing.
In terms of how institutional investors acquire digital assets, the statistics reveal the direct purchase to remain the most popular way of investing. Almost two thirds (60%) of the US-based investors admit they bought their cryptos directly, which is 5% more compared to the previous year.
Meanwhile, a significantly lower percentage (22%) of respondents added virtual coins to their portfolios via futures contracts. On the other hand, the latter form of investment almost doubled (9%) within a year with a total trading volume of cryptocurrency derivatives exceeding $2.1 trillion within the first quarter of the year.
Bitcoin in the meantime stays the most popular digital assets among the investors, as even a quarter of them are confirmed to be holding the world’s leading crypto. Accordingly, only 11% of institutional respondents admitted to being invested in Ethereum (ETH), the second-biggest cryptocurrency by market capitalization.
Reportedly, over 90% of respondents that are positive towards digital assets, expect virtual currencies to form at least 0.5% of their investment portfolio. The number of US respondents with such an opinion increased by 9% since last year and currently is 88%.
Institutional investor’s interest in digital assets is constantly rising lately. With large companies like Grayscale investing in cryptocurrencies, the uptrend seems to be strong and involving. According to Tom Jessop, president of Fidelity Digital Assets:
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.
Attractive for the majority of investors
The vast majority of institutional investors in Europe (82%) and in the US (74%) find digital currencies an attractive form of investment. Even 36% of them like virtual coins to be uncorrelated to other asset classes, 34% admire the innovative side of them and 33% of investors think the digital currencies have high upside potential.
The sharper difference between European and American investors, however, comes in terms of government intervention towards digital assets. Since 25% of European respondents find freedom from government regulation appealing, only 10% of American respondents think the same.
Additionally, over half of the surveyed investors still (53%) find cryptocurrency volatility one of the main factors slowing the broader cryptocurrency adoption. Other named obstacles include concerns around market manipulation (47%) and lack of fundamentals to measure the proper value (45%), the percent however lower compared to the previous year.