- Institutional investors take a long-term stance on cryptocurrencies because they believe they are here to stay.
- Some investors are taking advantage of the current cryptocurrency winter to educate themselves and lay the foundations for the future.
- The investment situation in this new asset is constantly evolving.
- Regulatory uncertainty is a major concern among most institutional investors.
A study of institutional investors revealed that during the cryptocurrency winter, these investors boosted their allocations. Many investors saw the cryptocurrency winter as the right time to use cryptocurrencies in order to learn the technology and develop for the future.
The research sponsored by Coinbase (NASDAQ:) was conducted between September 21 and October 27 and was released to the public on November 22. It shows that 62% of institutional investors with cryptocurrency holdings have increased their allocations over the past year.
The study found that only 12% of institutional investors have reduced their exposure to cryptocurrency. This means that despite the recent price declines, the majority of institutional investors may still be bullish on digital assets for the long term.
Most institutional investors prefer BUY and HODL
Over half of the investors who participated in the survey indicated that they are now using or expect to adopt a buy-and-hold strategy for cryptocurrencies, with cryptocurrency prices expected to remain flat and range-bound over the next 12-month period.
Most investors believe that cryptocurrency will still be important in the future and view it from a long-term viewpoint. 72% of institutional investors believe that digital assets are here to stay, indicating that institutional adoption has reached a new level of maturity and is now well established, according to the survey.
Moreover, 58% of investors said they plan to increase their portfolio allocation to cryptocurrency over the next three years. Almost half “strongly agree” that cryptocurrency valuations will improve in the long term.
The survey indicates that investor motivations for allocating capital to this asset class are changing. Reasons given for investing include the desire to increase returns, diversify portfolios, support new technologies, and diversify risks. This differs from previous research, which focused more on the ability of assets to protect against inflation and had a low correlation with other asset classes.
on the flip side
- In line with previous reports, regulatory uncertainty was once again cited as a major issue for investors when deciding whether or not to put money into cryptocurrency, with 64% of those expecting to invest in the next year citing such concerns.
- The survey was conducted before the collapse of FTX, which depending To CoinShares caused a record rise in short investment products.
- Currently, the total assets under management of institutional investors in cryptocurrency are $22 billion, which is the lowest in two years.
Why should you bother
The Coinbase study used a nationally representative sample of 140 US-based institutional investors with a total of $2.6 trillion in assets under control. The survey was conducted by the B2B publication’s institutional investor research lab.
The issue for institutions getting involved in cryptocurrency is that large, well-considered investments help calm this market, which is a very volatile one. It is believed that the presence of important investors in this market will make it an attractive option for investors, which in turn will attract a variety of new investors, which ultimately leads to more stability.
Read more about institutional investing in cryptocurrencies:
Institutional investors are abandoning digital assets after the collapse of FTX
Institutions Converting (BTC) To Cold Wallets: Will Prices Go Up?