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Institutional investors bolster cryptocurrency allocations amidst growing confidence
Invest
Institutional investors bolster cryptocurrency allocations amidst growing confidence
A recent study by London-based Nickel Digital Asset Management, a leading regulated digital assets hedge fund, has revealed a significant shift in the mindset of institutional investors and wealth managers towards cryptocurrencies.
Institutional investors bolster cryptocurrency allocations amidst growing confidence
A recent study by London-based Nickel Digital Asset Management, a leading regulated digital assets hedge fund, has revealed a significant shift in the mindset of institutional investors and wealth managers towards cryptocurrencies.
The research, which involved participants from the US, UK, Germany, Switzerland, Singapore, Brazil, and the United Arab Emirates managing around $816 billion in assets collectively, found that 63% of these investors now rank cryptocurrencies among their top five assets for the best risk-adjusted returns over the next five years.
This positions cryptocurrencies ahead of traditional asset classes such as US equities, which 60% of the investors selected, and European investment-grade debt chosen by 55%. European equities and real estate follow closely behind. In contrast, gold was picked by only 12% of the respondents, indicating a shifting preference towards digital assets.
The study also highlights an expected increase in the use of cryptocurrencies as an institutional investment vehicle. Approximately 37% of those surveyed anticipate that cryptocurrencies will be widely used within five years, with an additional 41% believing it will occur within seven years.
Currently, only a quarter of institutional investors have allocated 1.5% or more of their assets to the digital asset sector. However, that is expected to change dramatically, with nearly 9 out of 10 (88%) projecting they will allocate 2% or more to cryptocurrencies and digital assets within the next three years. About 30% foresee their allocation increasing to 3% or more.
Anatoly Crachilov, CEO and Founding Partner at Nickel Digital, noted the growing recognition of digital assets as a distinct asset class. "As digital assets build a track record of resilience and sustainable recovery, institutional investors are increasingly recognising its potential as a standalone asset class, well beyond passing fad, as some were inclined to believe in the past," Crachilov said. He further elaborated on the confidence among investors being fueled by regulatory clarity and the participation of some of the world's largest asset managers, which is reflective in their long-term risk-adjusted return expectations and broader investment plans.
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