Due to unclear legal regulations, some buyer institutions have expressed interest in crypto assets, but they are only paying attention.
Recently, I came across an interesting survey.
Laser Digital, the crypto venture capital arm of Japan's Nomura Securities, conducted a survey covering more than 300 institutional investors in 21 countries in Europe, the Middle East, Asia, South Africa and Latin America, with a total capital of US$4.9 trillion, including wealth Management agencies, pension funds, hedge funds, investment funds and insurance asset managers.
The survey results show that 96% of investors surveyed recognize the potential of cryptocurrencies and believe that digital assets “represent an opportunity for investment diversification” on par with traditional asset classes such as fixed income, cash, equities and commodities.
Regarding views on crypto assets, more than four-fifths (82%) of professional investors are optimistic about the overall outlook for the crypto industry, with only a small minority highlighting their optimism for Bitcoin and Ethereum in the next 12 months. (3%) expressed a negative outlook, while the remaining 15% maintained a neutral stance.
When considering investment options, 88% of respondents said they or their clients were actively considering investing in digital assets. Looking specifically at Bitcoin and Ethereum, nearly half (48%) of participants see them as fundamental elements of the emerging Web 3.0 economy, providing long-term investment opportunities, while a further quarter (26%) view these assets as having A highly speculative asset with long-term investment prospects, while the remaining 26% view it primarily as a highly speculative asset.
Institutional investors aren’t just looking at the top two cryptocurrencies, with 88% of respondents saying they see value in other carefully selected cryptocurrencies beyond Bitcoin and Ethereum, with only 12% seeing no expansion into other cryptocurrencies. value.
Investors vary in their maximum allocation to digital assets within their risk spectrum. 22% of respondents said they could invest up to 5% of their portfolio, while 30% said they could allocate up to 4%.
Looking ahead, nearly half of participants (45%) said they or their clients planned to have total exposure to digital assets ranging from 5% to 10% over the next three years, with only a handful (0.5%) mentioning There was no exposure to digital assets during this period.
In terms of preferred exposure strategies within the digital asset class, Momentum (which allows us to earn gains when prices continue to move along past trajectories) emerged as the most popular choice, with 80% of investors indicating a preference for it. This is followed by Value (the benefits we get when prices return to some previous equilibrium state;), favored by 68% of respondents.
Finally, Carry (where we are able to earn revenue when prices do not change) is favored by 61% of respondents. However, an overwhelming majority (77%) expressed a preference for a risk strategy combination of all these factors.
All of the above seems to be very optimistic data, but there are also two "risk factors" worth paying attention to.
90% of professional investors surveyed said it was important to have support from “large traditional financial institutions” for any crypto-asset fund or investment vehicle before they or their clients would consider committing money.
About 75% said “legal or regulatory restrictions” might prevent their firm or clients from investing in crypto-related funds or products.
To sum up, buy-side institutions and their clients are curious or interested in crypto-assets, but unclear legal regulations and the lack of entry tools such as ETFs keep them in a wait-and-see state for the time being.
This is similar to the author's actual experience. Some buyer institutions I have contacted have expressed interest in crypto assets and are not investing for the time being but paying attention.
Compared with the stock market, the crypto world lacks tools or products such as ETFs and public funds, which allows most retail investors to directly gamble in the market, swarming and leaking.
During the "Grayscale Bull Market", practitioners in the crypto industry once shouted that "there will never be another big bear market in the future, because the future will be dominated by institutions." However, they did not expect that the so-called institutions would either make a thunderstorm or outperform everyone else. quick.
From this perspective, a Bitcoin ETF makes a lot of sense.
As Timothy Massad, former chairman of the U.S. Commodity Futures Trading Commission (CFTC), wrote: “Bitcoin ETFs will become a way for retail investors to invest in the cryptocurrency without actually buying it and dealing with the complexities of custody.”
Investing in Bitcoin ETF is equivalent to indirectly purchasing Bitcoin. Compared with traditional trading methods: on the one hand, the transaction threshold is lower, eliminating the need for investors to learn digital currency trading platforms or over-the-counter trading operations, wallet storage, and private key management. The learning cost; on the other hand, it avoids platform risks (exchange theft and insufficient supervision) and self-sustainment risks (improper preservation).
In addition, Bitcoin ETFs provide institutional investors with a compliant investment channel to invest in Bitcoin, which means that traditional fund companies can also bring more entry funds through ETFs to indirectly realize Bitcoin investment portfolios, such as the U.S. market Pension funds, a very important institutional investor, are unable to participate in direct investment in the crypto market due to policy restrictions. But if Bitcoin were packaged as an ETF, pension funds could include it in their portfolios as a compliant investment vehicle in the crypto market.
However, Bitcoin ETFs are faced with another regulatory hurdle. At least the United States is currently in an unfriendly and even chaotic state regarding crypto asset supervision, with no clear compliance guidance. Recently, the U.S. SEC has successively filed lawsuits against Coinbase and Binance. It has released a signal that the United States is tightening its supervision of cryptocurrency. Almost all crypto assets can be covered with the coat of "securities" and then "punched and kicked."
Therefore, both individuals and institutions are waiting for the regulation to be implemented. They are not afraid of "quick one-size-fits-all", but are afraid of vagueness and then keep delaying it for one or two years. Life is short, how many more times can we go through? What about a bull market?