A new survey suggests that institutional investors will be increasing their crypto holdings dramatically in the next five years. This revelation states that the investors are not jolted from investing in the rising asset class despite the ongoing coronavirus pandemic.
Numerous factors may help cryptocurrencies
The latest survey was conducted by crypto-insurance firm Evertas investigated investing patterns of a group of institutional investors with a collective $78 billion assets. The group includes funds, exchanges, traditional financial institutions, custodians, family offices, and ultra-high net worth individuals.
Ninety percent of the survey participants believe that institutional investors will be increasing their cryptocurrency holdings in the next five years. Some previous studies have shown similar results, highlighting a growing investor interest in digital currencies.
Fidelity Digital Assets states that the investors were not deterred because of the coronavirus pandemic and continue to have faith in the crypto ecosystem. The number of institutional investors with crypto exposure has also more than doubled since 2019.
Concerns still need to be addressed
While there is a heightened interest in digital currencies, investors also have certain concerns related to their investments. About 56& survey participants say that they were “very concerned” about the lack of insurance in the crypto sector. Another 54% felt “very concerned” about the compliance procedures that the crypto industry requires.
The respondents have also identified some of the factors that could push institutional investors to start holding more crypto assets. About 84% of the survey respondents say that improvement in government regulatory infrastructure will improve in making crypto an attractive investment alternative. About 80% of the respondents believe that the crypto market will grow in the next few years. Institutions will find them a better opportunity to invest in since a bigger market will also bring better liquidity for them.
If mainstream fund managers or financial service companies enter the market, then investor sentiment could be affected positively. This statement was supported by 76% of survey participants.