Institutional Investors Getting Comfortable With Crypto Assets
A groundbreaking survey conducted by Swiss digital bank, Sygnum, reveals a burgeoning interest in crypto assets among institutional investors. The Sygnum Future Finance Survey, conducted at the end of the third quarter of 2024, collected insights from over 400 institutional and professional investors spanning 27 countries. Notably, 33% of participants were existing clients and investors of Sygnum.
This survey underscores a noticeable shift in the risk appetite of traditional institutional investors toward digital assets. More than half of the client portfolios surveyed have allocated over 10% to digital assets, signifying a growing confidence in this sector. An impressive 63% of respondents reported having a “high-risk appetite” for digital assets. In comparison to data from 2023, there is a marked increase in the proportion of respondents with high or very-high risk tolerance for crypto assets in 2024.
Furthermore, a striking 91% of respondents indicated investments in leading blockchain projects such as Bitcoin (BTC) and Ethereum (ETH), showcasing a preference for digital assets perceived as relatively less volatile. The motivations behind investing in crypto assets were multifaceted: 62% of respondents cited the desire to gain exposure to the burgeoning digital asset megatrend, 52% aimed for portfolio diversification, 45% viewed it as a macro hedge against geopolitical uncertainties and currency debasement, and 38% sought yield generation.
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Intriguingly, there has been a shift in perception regarding crypto as an asset class. In 2023, 44% of respondents considered crypto an alternative asset class, while in 2024, this figure dropped to 31%. This transformation suggests a growing recognition of the maturity of digital assets, largely driven by the success of crypto exchange-traded funds (ETFs).
Majority Investors Want To Increase Digital Assets Exposure
The survey unveiled that a substantial 79% of respondents are planning to increase their investments in crypto assets within the next year. Notably, many investors who currently have no exposure to crypto assets intend to enter the market within this timeframe, potentially resulting in significant capital inflows by the middle of 2025.
Interestingly, regulatory uncertainty, once a primary concern, is no longer the main deterrent for investing in this emerging asset class. This year, 53% of respondents cited asset volatility as a barrier to entry, while 50% pointed to a lack of trust as the primary obstacle to crypto investment.
Exploring specific sectors within the crypto landscape, 76% of respondents expressed interest in Layer 1 blockchains like Bitcoin and Ethereum. Additionally, 55% of clients highlighted web3 infrastructure as a focal point, largely fueled by advancements in AI and decentralized physical infrastructure networks (DePIN). The Layer 2 ecosystem also garnered interest, attracting 41% of investors.
A significant 71% of respondents noted that the approval of both BTC and ETH ETFs by the U.S. Securities and Exchange Commission (SEC) significantly bolstered their confidence in crypto investments. This regulatory endorsement has instilled a sense of legitimacy and security among investors.
According to data from SoSoValue, total net assets held across U.S. spot Bitcoin ETFs currently stand at a staggering $95.40 billion, while Ethereum ETFs hold $9.48 billion. Notably, BlackRock’s Bitcoin ETF has surpassed the firm’s gold ETF in terms of assets under management, signifying a paradigm shift in investor preferences.
At present, Bitcoin is trading at $91,200, reflecting a 4% increase over the past 24 hours. The total cryptocurrency market capitalization currently stands at $3.14 trillion, marking a 1.7% rise in the same timeframe.
In conclusion, the survey by Sygnum underscores a growing acceptance and enthusiasm for digital assets among institutional investors. As the crypto landscape continues to evolve, it is evident that traditional investors are increasingly recognizing the potential and benefits of incorporating crypto assets into their portfolios. This trend is poised to shape the future of finance, as more investors seek to capitalize on the opportunities presented by this dynamic and rapidly evolving market.
