Institutional investors are growing their allocation towards cryptos from 22% last year to 27% according to a new survey by Fidelity.
From November 2019 to early March 2020, 800 investors across the U.S. and Europe were interviewed, 400 of them in each continent.
The survey spanned a variety of investor segments, including high-networth individuals, financial advisors, family offices, crypto hedge and
venture funds, traditional hedge funds, endowments and foundations.
About 70% of survey responses were collected online and about 30% were
collected via telephone, they say.
Fidelity finds that for almost 80% of investors there is something appealing about digital assets. The most appealing characteristics are the lack of correlation with other asset classes, exposure to an innovative technology and high potential upside.
Of those who have invested, 59% of institutional investors in the United States have direct exposure to cryptos, that being they hold the asset itself instead of futures, options, or some other derivative. They say:
“Current investment was led by crypto funds, high net worth individuals,
financial advisors and family offices.
When we mention ‘crypto funds’ throughout the rest of this review, we are referring to hedge funds and venture capital funds that collectively focus on the digital asset and blockchain universe, and invest in digital assets and/or digital asset companies.”
Fidelity speculates more are hodling the asset itself because of “maturing custody offerings” and due to increased familiarity with cryptos.
26% of institutional investors hold bitcoin while 11% hold ethereum. For the latter they say “it is held primarily by crypto hedge and venture capital funds.”
Overall the survey finds cryptos are now viewed in a more favorable light, with Fidelity stating:
“In the U.S., the perception towards digital assets has improved since 2019, with the portion of U.S. investors expressing a neutral or positive perception rising from 43% to 58%.”
European institutional investors are slightly more positive towards cryptos, but still only a quarter of them have invested in bitcoin and even less in eth.
In addition the finding that 11% hold eth suggests the second biggest crypto and network has reached a tipping point.
That’s a theory that suggest if something is adopted by 10% of the population, then it moves to the mainstream with eth not quite there yet, but it has now passed the biggest hurdle.