Digital asset confidence returning for institutional investors
Institutional investors in the UK are increasingly confident in the outlook for digital assets and believe they should play a significant role in diversified portfolios, according to new research.
The study, by London-based Nickel Digital Asset Management, found that 67% of institutional investors and wealth managers in the UK believe investment opportunities in the sector are attractive on a 12-month view with 13% saying they are very attractive.
The FCA-authorised hedge fund manager, founded by an alumni of Bankers Trust, Goldman Sachs and JPMorgan, conducted the research with institutional investors and wealth managers in the UK who collectively manage around $507 billion in assets.
It found growing confidence in regulators is supporting investment. Around 17% believe regulators are very committed to introducing robust regulation while a further 77% believe they are quite committed.
The optimism is feeding through into longer-term support for Bitcoin growth – 40% believe Bitcoin will hit the landmark $100,000 valuation with 90% predicting the price will be achieved within five years.
Nickel’s study was conducted when Bitcoin was around $30,000 and Ethereum around $1,900. None of the investors questioned believe either Bitcoin’s or Ethereum’s price will end the year below these levels.
However, security concerns remain the biggest barrier to investing in the digital assets sector for institutional investors who are sceptical. Around 50% who are reluctant to invest cite worries about security while 47% have concerns about understanding of the sector and 43% are worried about volatility. Just 30% are concerned about regulatory uncertainty.
“Institutional investors and wealth managers in the UK are increasingly confident about the short-term and long-term director of the crypto and digital assets sector and that is translating into a recognition of the diversification benefits offered by digital assets in portfolio construction,” said Anatoly Crachilov, CEO and Founding Partner at Nickel Digital.