Bitcoin has these factors to thank for its growing institutional appeal
Institutional adoption of cryptocurrencies has seen a great deal of momentum this past year, leading to billions being poured into the industry along with a sense of legitimization. Now, several high net worth investors have diversified their personal portfolios through crypto. What’s more, companies like MicroStrategy and Tesla have also added them in the billions to their balance sheets.
In fact, more than half of the institutional investors surveyed in a recent Fidelity report seemed to have invested in digital assets in some form.
The study, which surveyed 1,100 institutional investors in the U.S., Europe, and Asia, found that Asia and Europe saw higher rates of investment than the U.S. It also found that 70% of all surveyed investors in Asia are already delving into digital assets.
According to the report, this could be due to Asian investors being early adopters of more traditional digital payments as well.
As far as the cryptocurrency of choice is concerned, Bitcoin and Ethereum stood at the top, followed by Litecoin and Binance Coin. More interestingly, however, the survey found that a very small number of investors are directly holding these assets in their portfolios.
This has been the case in the U.S, where an increasing number of respondents prefer investment products over direct purchases of digital assets.
On the flipside, both European and Asian investors’ preference for buying digital assets directly rose over the year. This could likely be due to the vast array of public trust-structured investment products available in the U.S., along with a number of private fund offerings issued by managers.
In any case, there has been an overall increase in investors interested in products that hold multiple digital assets. With thousands of digital assets on the market, it seems only logical for investors to not want to miss out.
In any case, 71% of those surveyed in the U.S and Europe plan to buy cryptocurrencies in the future. Moreover, 70% of all investors surveyed had a neutral-to-positive perception of digital assets. This uptick in intent and interest raises the question of what is persuading these investors to dive into this new asset class.
According to the report, the most appealing attribute of digital assets is their potential upside. With BTC noting an uptick of 303% on its 2020 ROI, this appeal is hardly misplaced. Secondly, ‘innovative technology play’ has been crucial too, with 39% of all respondents sharing this sentiment. The lack of correlation with other assets also played a part in catalyzing this appeal.
This last factor has, in fact, gained further ground in the U.S and Europe over the past year. Especially at a time when near-zero interest rates are popular and these regions have seen a growth in fiscal stimulus. Many young investors in the U.S have invested their stimulus checks for buying Bitcoin and other digital assets.