Digital assets such as Bitcoin are gaining popularity among institutional investors in the U.S. and abroad, according to a survey by Fidelity Digital Assets.
The survey of 800 institutional investors across the globe found that 36% of respondents said they are invested in digital assets, and 60% believe digital assets have a place in their investment portfolio.
The research included financial advisors, family offices, pensions, crypto and traditional hedge funds, high-net-worth investors, and endowments and foundations. It was conducted from November to early March, and sought to understand institutional interest and adoption of digital assets, as well as the key barriers to participation in the asset class, the company said.
Of those who indicated that they are invested in digital assets, European institutions (45%) were more likely to hold them compared to their American counterparts (27%), according to the survey. This marks the second year Fidelity conducted the survey in the U.S and the first in Europe. Compared to last year, U.S. investors allocated to digital assets increased by five percentage points.
The survey found that more than 60% of U.S. and European investors who have exposure to digital assets buy them directly. Fifty-nine percent of U.S. investors who invest are invested directly, up from 55% in 2019. Additionally, it said 22% of U.S. respondents, a 13-percentage-point jump from 2019, invested in digital assets have exposure via futures.
Bitcoin continues to be the digital asset of choice with over a quarter of respondents holding bitcoin; 11% have exposure to Ethereum, the survey showed.
Fidelity also found that nearly 80% of institutional investors find something appealing about digital assets, with the three almost equally compelling characteristics across U.S. and European investors being: uncorrelated to other asset classes (36%); an innovative technology play (34%); and high potential upside (33%). The portion of U.S. respondents who found appealing characteristics in digital assets grew by six percentage points to 74%; for European investors, 82% found something appealing about digital assets.
The research also noted that 25% of European investors found it appealing that certain digital assets are free from government intervention; only 10% of investors in the U.S. felt this way. And while 60% of institutional investors feel digital assets have a place in their portfolio, opinions vary on precisely where. Nearly 40% of institutional investors believe digital assets belong in the alternative asset class, while 20% believe they belong in an independent asset class, the survey said. Those investors may see certain advantages in digital assets over traditional alternatives in that they are relatively more liquid, have low transportation, transaction and storage costs and have unique return drivers, Fidelity said.
Tom Jessop, president of Fidelity Digital Assets, said the survey results confirm a trend that the company is seeing toward greater interest in and acceptance of digital assets as a new investable asset class. “This is evident in the evolving composition of our client pipeline, which spans from crypto native funds to pensions,” he said.
But despite the upward trending number of institutions adopting digital assets, investors cited obstacles, such as price volatility (53%), concerns around market manipulation (47%), and lack of fundamentals to gauge appropriate value (45%), the survey said.