A new study of institutional investors and wealth managers, who collectively manage around $108.4 billion in assets, reveals 85% say they now have dedicated teams reviewing cryptocurrencies and digital assets (please see the attached press release).
The research, which was commissioned by London-based Nickel Digital Asset Management (Nickel), Europe’s largest regulated and award-winning digital assets hedge fund manager reveals 21% of these teams have only been running for the past three months, and 42% were established between three and six months ago. Around 31% were established between six months and a year ago while just 5% have been operating for over a year. Of those that do not currently have dedicated teams in this area, only 7% said they have no plans to set them up.
In addition to the strong capital growth of many cryptocurrencies during the Coronavirus crisis, Nickel Digital’s research found the dramatic increase in the number of funds and investment strategies focusing on crypto and digital assets is contributing to institutional investors and wealth managers wanting to invest in the market. Half (49%) of those interviewed strongly agree with this view, and 45% slightly agree.
When it comes to investing in crypto and digital assets, only 20% of professional investors said they prefer beta strategies, with 34% opting for Alpha focused funds. One in four preferred digital investment opportunities from private equity and venture capital businesses, and 21% said they had no preference.
When asked to pick the three main reasons for preferring Alpha crypto/digital strategies, 62% said it was to take advantage of market inefficiencies, 56% cited having greater freedom to invest in a wider variety of crypto and digital assets, and 53% said it was a better way to manage volatility.