While some early institutional investors are already starting to embrace decentralized finance (DeFi), a large majority are still hesitant to take their big plunge into the cryptosphere. A situation that may well change dramatically next year, as for the first time a majority of these big whales are ready to bet on Bitcoin (BTC).
The growth of Bicoin and cryptos attracts more and more
After the retail investor bull run on cryptocurrencies in 2017, the current bull run that began in late 2020 was clearly initiated by the purchase of crypto derivatives, such as Bitcoin futures or shares in Grayscale funds. In other words: much of this rise was generated by the arrival of the first institutional investors.
Now, according to a recent survey commissioned by investment fund Nickel Digital Asset Management, the big laggards are also seriously considering the move.
Of the institutional investors who are not yet exposed to cryptocurrencies, 62% of them would plan to finally invest in the sector, and as early as the year 2022.
Whether from the US, UK, France, Germany or the UAE, all the investors surveyed (50 wealth managers and 50 institutional investors) seem to have good reasons to bet on crypto-assets :
- The reason given most often, precisely in 47% of cases, is the long-term capital growth prospect of crypto-currencies;
- 44% do so out of mimicry, as they admit that more and more companies and fund managers are investing in digital assets, which reinforces their own confidence in this asset class;
- 41% believe it’s because the regulatory environment surrounding cryptos has improved and clarified;
- 34% even think it’s a good hedge against inflation.
Cryptocurrencies are earning their title of nobility
The days when cryptos were (dis)regarded at best as a speculative casino game seem long gone. They now count, not only as an asset class in their own right, but also very attractive for their growth potential, among other qualities.
Henry Howell, head of business development at Nickel Digital, believes that the changing trends highlighted by this survey will itself “fuel the growth” of the crypto market among “professional and sophisticated” investors.
“There is no doubt that the crypto asset market is becoming more normalized within the institutional and wealth management sectors. This is due to a number of factors, including the strong performance of the market despite the Covid crisis, more established investors and firms endorsing the market, and improvements in the industry’s infrastructure and regulatory framework.”Henry Howell
While institutional investors, who have yet to bet in cryptos, might logically look, at least initially, to Bitcoin and Ethereum (ETH), which dominate the market, other projects could also do well. Indeed, there are indications that very wealthy investors are starting to take a close interest in altcoins, such as Cardano (ADA) or Solana (SOL).