Majority of Institutional Investors Buy Crypto Because of Its “High Potential Upside”

Although the cryptocurrency sector has been through some difficult times since the turn of the year, data has revealed that interest from investors, especially those at the wealthier end of the spectrum, in their assets is not waning.

As it happens, professional and wealthy investors are still buying cryptoassets this year and are interested in buying them in the future, according to an annual survey conducted by Fidelity Digital Assets, CNBCKate Rooney said on October 28.

Specifically, the ‘2022 Institutional Investor Digital Assets Study’ found that six in ten (58%) institutional investors said they bought digital currencies in the first half of the year, even though Bitcoin (BTC) fell around 60% in the same period.

As the main reason to buy, over 40% of investors interviewed in Fidelity’s study cited digital assets’ high potential upside or innovative technology plays; interestingly, despite the oft-mentioned correlation with the stock market, a quarter of institutional investors believe that crypto is uncorrelated to other assets, which they see as an advantage.

High net worth investors drive performance

Among the buyers are high net worth investors in management, with 48% saying they invested in crypto, followed by financial advisors at 37% and family offices at 25%. Pension funds and endowments had the lowest allocation as they tend to be the most risk averse of the group.

On top of that, the study found that 74% of high-net-worth respondents said they planned to invest in crypto in the future, representing a significant increase from 31% year-over-year (YoY).

Asked to comment on the study results, Fidelity’s head of research told Rooney that these customers tend to be long-term investors who are willing to wait for some of the other use cases to play out.

Reasons to (not) invest

As the main reason to buy, over 40% of investors interviewed in Fidelity’s study cited digital assets’ high potential upside or innovative technology plays; interestingly, despite the oft-mentioned correlation with the stock market, a quarter of institutional investors believe that crypto is uncorrelated to other assets, which they see as an advantage.

At the same time, another study produced similar results, with a Bloomberg MLIV Pulse survey reporting that 56% of professional investors are still keen to venture into crypto, despite the United States Securities and Exchange Commission (SEC) intensifying its legal activities in the space.

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