Goldman Sachs Crypto Survey Shows Investors Plan to Increase Cryptocurrency Holdings
With increased institutional adoption and mainstream interest surging, investors continue to be bullish about crypto. A new Goldman Sachs survey shows that 60% of those polled expect to increase their digital asset holdings over the next one to two years.
The recent Goldman Sachs Digital Assets survey, which polled the firm’s clients on their activities and outlook concerning digital assets, found that 32% of respondents said they intend to “significantly increase” their crypto holdings, while 28% say they will “somewhat” increase their holdings.
The new survey comes on the heels of the investment bank’s execution of the first over the counter (OTC) cryptocurrency transaction with Galaxy Digital on March 21 — an industry first reflecting the bank’s continued expansion of crypto offerings. The deal also demonstrates the continued maturation and adoption of digital assets by banking institutions.
Ben Nadareski, vice president of global trading at Galaxy Digital, told GOBankingRates that “we are seeing a substantial shift in participation, where early movers and risk takers are now being joined by a much broader group of market participants.”
“With core institutional players like Goldman Sachs enabling crypto offerings to their clients, we are starting to see traditional asset managers, funds, pensions, family offices and ultra-high net worth investors enter into crypto markets through a much wider range of institutional-grade products,” Nadareski added.
He added that the broad crypto adoption trend is a function of both client demand and market maturity. Banks, for example, are seeing unprecedented demand for crypto exposure from their clients. However, said banks couldn’t initially meet this demand due to regulatory uncertainty around crypto, he explained, adding that the paradigm is changing.
“Banks are finding solutions to meet this demand, such as in the OTC market as we’ve seen with our recent trade with Goldman Sachs,” Nadareski said. “Galaxy is helping institutions answer that demand. We executed the first OTC crypto trade with a major bank, Goldman Sachs, earlier this month, and we expect other institutions to follow. Galaxy is the bridge into crypto for banks and other institutions. And now that the bridge has been built, we’re expecting to see a lot more traffic,” he said, adding that crypto is clearly emerging as a fifth asset class.
“Institutions have a responsibility to provide access to a diversified portfolio, and that now includes crypto.”
Crypto Investors Interested in More Coins
While bitcoin and ether take the lion’s share of investors’ crypto interest, the survey notes that the asset universe of interest for potential exposure expands outside of these two offerings. Indeed, 22% of those polled say they favor bitcoin as well as ether, 15% say they are interested in altcoins, 14% in DeFi tokens, 13% in stablecoins, and 9% in NFTs.
Nadareski said that as BTC and ETH together represent more than half of the roughly $2 trillion crypto market, that’s where the institutional liquidity is today — and it helps explain why investors, especially institutions, are most comfortable trading them as the entry point into crypto markets.
“As volumes continue to increase among some of the crypto ‘majors,’ such as solana, terra and others, that will help to boost liquidity and market access for a broader set of coins, which in turn is likely to attract more interest from institutional investors,” he added. “We expect more diversification at the institutional level to play out over the next 3-6 months.”
Larry Felix, co-founder and CEO of Noteworthy, noted that altcoins are not far behind BTC and ETH in the survey, and that this result — in terms of interest — “is a very good sign.”
“A diversified industry is a strong industry, and investments in ethereum and altcoins like solana or terra are a big reason that crypto can weather the volatile leaps in bitcoin price in a way that it could not in the past. Bitcoin is always going to be the king of crypto, but I am glad that it’s no longer the only one relevant in the eyes of traditional finance,” he told GOBankingRates.
Another key finding of the survey is that a staggering 83% of those polled see a central bank digital currency (CBDC) playing a somewhat or very significant role in the future of financial markets.
“Up to this point the Biden administration, while researching a CBDC, hasn’t shown a strong interest in creating one, and there is strong opposition to it from some members of Congress. But if we do get a digital dollar on the blockchain it would be the biggest shakeup to the crypto ecosystem since the launch of ethereum,” Felix said.
Finally, the survey notes that the top drivers for investing in crypto are the high potential return, institutional adoption and low correlation to traditional assets.
“Ultimately, crypto is going to need to take over some of traditional finance’s investors and market share in order to keep growing,” Fabrice Cheng, CEO & co-founder of Quadrata, told GOBankingRates. “Given investors cited institutional adoption and high potential return as reasons they invested, I expected the holdouts to keep converting and putting their money into crypto, because both institutional adoption and prices should keep increasing over the next few years.”
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