Despite uncertainty surrounding Bitcoin’s price recovery, institutional investors and fund managers are most likely to increase their cryptocurrency exposure between now 2023.
The survey was conducted by Nickel Digital Asset Management, a UK-based investment manager, between May and June. It included institutional investors as well as fund managers from the US and Europe. 82% of respondents expected to increase their crypto exposure in the next 2023. 40% of respondents said that they would dramatically increase their crypto holdings.
“Institutional money will flood in crypto from around the world in the future because there is a strong case for another market crash due rising inflation in major countries.
Inflation hedges have performed better than gold in Bitcoin over the past two-years and continue to do so. According to Hitesh Malviya (founder, itsblockchain.com), institutions are beginning to see Bitcoin as a way to hedge against rising inflation. They can now allocate more capital for it in the near future.
Respondents cited that the primary reason for increasing crypto investments was the long-term capital gains prospects of digital assets and cryptocurrencies.
38% said that being exposed to crypto-assets has made them more comfortable and confident with the asset class. 37% claimed that crypto assets are more popular with fund managers and corporate leaders than they were, which also gave them greater confidence.
An improving regulatory environment was another key factor for the 34% who wanted to increase their crypto holdings.
“Many professional investors who have crypto assets holdings are looking to increase their exposure. This is driven by several factors, including the strong market performance during and after the Covid-19 crisis, the endorsement of the market by more experienced investors and corporations, and improvements in the sector’s regulatory and infrastructure.
These trends will continue expanding,” Anatoly Crachilov (Co-Founder and CEO of Nickel Digital) said.
Nickel Digital’s analysis of the market at the start of June revealed that 19 companies listed with a market capital of more than $1 trillion had approximately $6.5 billion in Bitcoin. They had originally spent $4.3 Billion on the cryptocurrency, Crachilov said.
This analysis revealed that there was a staggering $43.2 trillion worth of bitcoin in various closed-ended trusts and exchange traded products.
Bitcoin prices have fallen by half from their mid-April peak of $64,000. It was still not at the April level, and it is unlikely that it will sustain above the $34,000 mark it traded at in May.
According to CoinMarketCap’s latest data, Bitcoin’s share of the total crypto market capital has dropped to 44% from almost 70% in January.
Multiple factors are responsible for the slump, including China’s crackdown against crypto usage and mining in China, Elon Musk tweets and increased regulation of digital currency by the US lawmakers.