Study Reveals Changing Perception Of Cryptocurrencies Amongst Institutional Investors And Wealth Managers

A new study ⁽¹⁾ of institutional investors and wealth managers, who collectively manage around $108.4 billion in assets, reveals that since the Coronavirus crisis started, 43% say they now have a much more positive view of cryptocurrencies, and 35% say it has improved slightly.

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 founded by senior traders and investment professionals formerly from major financial institutions including Goldman Sachs and JPMorgan, reveals 78% now have a positive or constructive view of Bitcoin, with only 9% saying their perception of the cryptocurrency is negative. The corresponding figures for Ethereum are 77% and 7% respectively.

When asked to pick their three main reasons for developing a more positive view of cryptocurrencies since the crisis started, 58% of professional investors cited strong capital growth, and this was followed by 53% who said it is because many crypto and digital assets have shown attractive diversification benefits when compared to mainstream asset classes. Some 47% of respondents included improving custodial services in their three main reasons for having a more positive view of crypto currencies, and 41% cited growth in market capitalization and its positive impact on liquidity, among their top three reasons.

Fiona King, Head of Institutional Sales, Nickel Digital, commented: “Many cryptocurrencies have performed well since the Coronavirus crisis started. From 1^st January 2020, the value of Bitcoin and Ethereum have increased by 460% and 1812% respectively.

“The crypto and digital markets have also matured a great deal, providing greater custodial services and liquidity for example. There is still much more to be done – especially in the area of regulation – but the market will continue to evolve and grow, and as this happens long-term perceptions of crypto and digital assets will improve even further, and professional investors will increase their allocation to them.” 

Nickel Digital’s infrastructure is designed to offer various access points to the crypto market

Nickel currently has four funds investing in the digital asset space. Its market-neutral Digital Asset Arbitrage Fund pursues an absolute return strategy without expressing directional views on the underlying crypto assets market. It exploits market inefficiencies and price dislocations, and harnesses swings of volatility to deliver consistent positive returns within a strictly defined risk management framework. The fund delivered over 96% of positive months since inception over two years ago, with volatility of 3.5% and Sharpe of 3.4.

Diversified Alpha (Digital Factors) Fund is a non-directional multi-strategy fund which wraps a portfolio of attractive but hard-to-access and capacity-constrained strategies into a single, investible fund. Among the strategies it deploys are high-frequency market making, statistical arbitrage, relative value, volatility arbitrage, and trend following. The fund protected capital well in May, delivering a record monthly performance of +4.7% despite the underlying market going through one of the strongest corrections in recent years.

DeFi Liquid Venture Fund is designed to capture the growth potential of the broader digital assets space outside Bitcoin, spotting early winners in Layer 1 protocols and Decentralised Finance, the area of greatest financial innovation. The fund is an actively managed research-driven vehicle aiming at identifying early winners and capturing structural expansion of this space.

Nickel’s Digital Gold Institutional Fund, a Bitcoin tracker, provides secure, efficient, transparent, and liquid access to physically allocated Bitcoin. It delivers institutional-grade precision of trade execution available 7 days a week with one of the industry’s lowest expense ratios.

Footnotes

(1)     Nickel Digital commissioned the market research company Pureprofile to interview 50 wealth managers and 50 institutional investors across the US, UK, Germany, France, and the UAE. The survey was conducted online in November 2021.