71% of Institutional Investors Plan to Buy Crypto

İstanbul, Turkey - January 14, 2018: Close up shot of crypto currency memorial coins on a financial chart.
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Results from a new survey by Fidelity show that large, institutional investors are beginning to heavily favor crypto for a number of reasons.

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Based on the results from a new survey by Fidelity Digital Assets, over 70% of institutional investors plan on buying or investing in digital assets in the near future. Additionally, a whopping 90% of them plan to enter the crypto market by 2026.

The 2021 Institutional Investor Digital Assets Study was conducted from Dec. 2, 2020 to April 2 and included interviews with 1,100 institutional investors in the U.S., 408 in Europe and 299 in Asia. The survey spanned different investor segments, including high-net-worth individuals, financial advisors, family offices, digital and traditional hedge funds, institutional investors, financial advisors and endowments and foundations.

One of the more interesting findings included the appeal of digital assets. Fidelity found that almost 90% of investors find something appealing about digital assets, with the most appealing characteristics being the lack of correlation with other asset classes, exposure to innovative technology and high potential upside.

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Correlated assets are assets where a move in one may influence a move in another. A classic example of correlated assets are oil and airline stocks. An increase in the demand for travel will also cause an increase in the demand for oil to fuel the planes, so although they are two entirely different industries, their stocks are correlated.

Digital assets do not bear this burden. They are a performance mechanism all on their own, which is attractive to professional investors.

One of the reasons these figures are important for crypto markets is the impact institutional investors have on trading volumes and market movements in general. Institutional investors are typically funds or entire companies that have the power to invest millions or billions of dollars. With more than eight out of 10 investors feeling digital assets have a place in portfolios, as per Fidelity’s survey, the potential influence is a big deal.

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More than 80% of investors surveyed indicated they would be interested in institutional investment products that hold digital assets. This has huge implications for a market that consistently teeters on the edge of meme assets and international benchmarks.

One of the reasons for the growing crypto interest amongst institutional investors is the market turmoil of 2020. “The pandemic — and fiscal and monetary measures in response to it — has been a catalyst for many institutional investors to define their investment thesis and operationalize it,” Tom Jessop, president of Fidelity Digital Assets, stated in the report.

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Jessop refers to the economic restrictions put in place during the pandemic that all but halted the economy and, as a result, many parts of the market. One sector that was unaffected in terms of operations was digital assets, which had the freedom to operate as normal because there were no tangible barriers to trade.

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Crypto has seen a surge in popularity in recent years on its own, but if institutional investors also begin to put their muscle behind the assets, it could be the legs crypto needs to go fully mainstream.

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About the Author

Georgina Tzanetos is a former financial advisor who studied post-industrial capitalist structures at New York University. She has eight years of experience with concentrations in asset management, portfolio management, private client banking, and investment research. Georgina has written for Investopedia and WallStreetMojo. 

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