The majority (82 per cent) of institutional investors with exposure to cryptocurrencies and other digital assets plan to increase their holdings within the next two years.
Investment manager Nickel Digital Asset Management conducted a survey of institutional investors and wealth managers from the US, UK, France, Germany, and the UAE who currently have exposure to cryptocurrencies and digital assets.
Four out of 10 said they will dramatically increase their holdings, only one per cent said they would sell their entire holdings, and just seven per cent said they would reduce their exposure.
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However, Nickel said in most cases institutional investors with holdings in Bitcoin and other cryptocurrencies have very low levels of exposure as many have just been testing to market to see how it works.
The majority (58 per cent) cited long-term capital growth prospects of the sector as the main reason given for investing more in digital assets.
This was followed by increasing confidence levels in the asset class after having some exposure to cryptoassets (38 per cent) and more leading corporates and fund managers are investing in cryptoassets (37 per cent).
Some other popular reasons given included: the improving regulatory environment (34 per cent); they provide a good hedge against inflation (25 per cent); strong portfolio diversification benefits (21 per cent).
“The number of institutional investors and corporates holding Bitcoin and other cryptoassets is growing and their confidence in the asset class is also increasing,” said Anatoly Crachilov, co-founder and chief executive of Nickel.
“Our analysis at the start of June this year revealed that 19 listed companies with a market cap of over $1trn (£724.2bn) had around $6.5bn invested in Bitcoin, having originally spent $4.3bn buying the cryptocurrency.
“We also found a staggering $43.2bn worth of bitcoin is held through various bitcoin closed-ended trusts and exchange traded products.
“Many of those professional investors with holdings in cryptoassets are looking to increase their exposure and this is being driven by several factors including strong market performance during the Covid-19 crisis, more established investors and corporations endorsing the market, and the sector’s infrastructure and regulatory framework improving.
“These trends will continue to expand.”