In its early years, Bitcoin was regarded as one of the useless digital assets favored by criminals. However, over time, it has evolved into a hallmark of institutional recognition. This transformation can be attributed to several factors that have led to Bitcoin's remarkable performance. An interesting aspect to note is that family offices, traditional asset managers, and hedge funds hold diverse views on cryptocurrency, its products, and services. They also possess a staggering $17 billion in institutional capital.
The number of institutional investors allocating a certain percentage of their portfolios to digital assets is growing day by day. According to a recent survey, seven out of ten institutional investors plan to purchase or invest in cryptocurrency assets in the near future. Approximately 1,100 respondents stated that they already own such investments.
Currently, large institutional players are developing their own solutions and platforms for blockchain technology. For instance, JP Morgan established its Blockchain Center of Excellence (BCOE) in 2015 to assist in developing its blockchain solutions. However, they have also faced numerous challenges that prevented them from directly investing in the cryptocurrency market.
As most of these issues were resolved by the end of 2020, consumers are now well-informed about cryptocurrencies and are ready to use them for retail purchases. One of the reasons for this is the technological advancements that have provided companies with better access to crypto assets than ever before.
But why do you think institutional investors are eager to invest in cryptocurrency?
As previously mentioned, a survey involving over 400 pension funds, financial advisors, hedge funds, endowments, and investment funds found that 22% of respondents currently have access to digital cryptocurrency assets. 40% are open to investing in the crypto market in the coming years. Furthermore, 72% expressed a desire to purchase investment products with a significant weight in digital assets. 57% would like to buy crypto assets directly or from companies dealing in digital assets.
This study compellingly indicates that institutional investors favor cryptocurrency as an asset class. There is also a noticeable increase among institutional investors and national governments in the cryptocurrency market. Despite the heightened interest, the primary concern among institutional investors remains price volatility. Unlike traditional assets currently held in investors' portfolios, cryptocurrencies are more challenging to predict due to their fluctuating nature.
With new tools and platforms aimed at institutional investors, it is evident that the industry is gearing up for substantial capital to enter the cryptocurrency market.
