Business Essentials for Professionals


New Study Finds Digital Assets Expected To Be Bought By Most Institutional Investors

New Study Finds Digital Assets Expected To Be Bought By Most Institutional Investors
A study by Fidelity's cryptocurrency business revealed that despite price volatility of digital assets remains the main barrier for new entrants, 70 per cent of the institutional investors expect to make some invests in or buy digital assets in the future.
Digital asset investment was already present with more than half of the 1,100 institutional investors globally that were surveyed between December and April by Coalition Greenwich on behalf of Fidelity Digital Assets.
The research found that about 90 per cent of the investors who showed interest in investing in digital assets in the future said they expected the portfolio of their companies or their clients to hold some form of digital assets within the next five years. That should include direct investments in cryptocurrency or exposure through stocks of cryptocurrency companies or other investment products, the survey showed.
High net worth investors, family offices, digital and traditional hedge funds, financial advisors and endowments were among the investors who were surveyed.
The cryptocurrency business unit of Boston-based Fidelity Investments is Fidelity Digital Assets, launched in 2018, and it currently offers institutional investors custody and execution services for assets such as bitcoin.
The company was one of the first mainstream financial services providers to embrace cryptocurrencies, which increasingly have attracted established financial institutions.
Announcement of the launch of a cryptocurrency trading platform with Fidelity and Standard Chartered's digital assets custody unit was made late last month by TP ICAP, the biggest inter-dealer broker of the world.
There has however been a slump in the prices and trading volumes cryptocurrency despite the mainstream interest. The value of bitcoin has dropped by abound 50 per cent since it reached a record high in April this year.
The biggest obstacle for new investors entering the digital assets market is the high price volatility of the assets, said the companies that were surveyed in the report. The second most important factor that can act as a possible roadblock in making large scale investments in digital assets, as opined by the survey participants, was the lack of fundamentals needed to assess value of such assets. Companies and investors were also worried about market manipulation.
In contrast, a survey carried out by JPMorgan Chase & Co and published last month revealed that only 10 per cent of the institutional investment firms surveyed currently traded in cryptocurrencies and almost half of the firms in the survey had termed this emerging asset class as being "rat poison". Many of them also believed that the craze for digital assets was only a fad.

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc