(The Armchair Trader) - A recent study carried out by Nickel Digital Asset Management on 100 leading institutional investors and professional wealth managers has found that there has been a 94% average increase in their cryptocurrency and digital asset allocation in the last 12 months, with the majority expecting to increase their allocation even further over the next year.
Who is Nickel Digital Asset Management?
Nickel Digital Asset Management (Nickel) is one of Europe’s leading FCA-regulated investment manager dedicated to the cryptocurrencies and digital assets market. Recently, Nickel held a private media event to discuss the findings of new research on the changing perception and wealth allocation of crypto and digital assets amongst institutional investors and wealth managers.
Summary of the research findings
Nickel Digital commissioned research with 100 professional money managers from across the US, UK, Germany, France and the UAE, who manage over $108.4 billion worth of assets collectively. The study found that their asset allocation to cryptocurrencies and digital assets has increased by an average of 94% over the past 12 months, with over a quarter reporting increases in excess of 100%.
The attractiveness of the crypto market to institutional investors and wealth managers appears to be equally as strong in the future. 38% of portfolio managers surveyed expect their long-term allocation to digital assets to increase even further, predicting it to be in the range of 5 – 10% in the next few years.
Nickel’s research also found that the majority of professional money management organisations have already set up dedicated teams to cover crypto markets and that over half of the remaining firms expect crypto-specific teams to eventually be set up within their business.
Why the sudden change of heart?
The dramatic findings of Nickel’s research beg the question of why institutional investors are taking such a willing approach to investing in an asset class which was deemed unprofitable by many just a few years ago. The change in public perception of leading cryptocurrencies such as Bitcoin and Ethereum that has taken place during the Covid-19 pandemic certainly plays a pivotal role, but the most influential factor appears to be the opportunity digital assets offer as a hedge against inflation.
Although, on the face of things, the outlook for increased cryptocurrency and digital asset adoption looks promising, the 100 institutional investors and wealth managers surveyed still have their reservations.
They perceive there to be key barriers to investing in these markets. These include the fragile security of cryptocurrencies and the high price volatility of digital assets. Above all, however, they highlighted the potential for regulatory changes as a key area of concern for their portfolios.
So what now for crypto markets?
Aside from the research findings, Nickel Digital Asset Management gave their own view on the landscape of the crypto and digital asset market. They remain extremely bullish both in the short- and long-term, expecting institutional investment into the market to increase at even greater rates in the near future.
By Adel Ahmed
Adel Ahmed is a reporter with The Armchair Trader based in London. He covers a broad range of financial markets and asset classes. He has completed the Bloomberg Markets Concepts course and is the President of the SOAS Investment Management Society.
