Professional investors are increasingly confident about investment opportunities in the crypto and digital asset sector over the short and long term despite recent market weakness, according to new research by London-based digital asset hedge fund Nickel Digital Asset Management.
Professional investors are increasingly confident about investment opportunities in the crypto and digital asset sector over the short and long term despite recent market weakness, according to new research by London-based digital asset hedge fund Nickel Digital Asset Management (Nickel).
Nickel, which was found by Bankers Trust, Goldman Sachs and JPMorgan alumni, commissioned research with 200 institutional investors and wealth managers from across seven countries who collectively manage around $2.85 trillion in assets and found they are planning to increase investment over the next six months and rate investment opportunities in the sector as attractive on a five-year view.
The study found 66% plan to increase or start investment in crypto and digital assets over the next six months including 12% who say their organisation will dramatically increase investment and 3% who say they will invest for the first time.
Their outlook is even more positive when taking a five-year view of the sector, with 38% saying the current investment opportunities in the sector are very attractive while 46% say they are quite attractive. Just 17% say the sector is unattractive on a five-year view.
The key reasons driving increased investment over the next six months are expectations of improved regulation in the sector and a recovery in valuations. Around 64% expect dramatic improvements in the regulatory environment while 63% predict a bounce in pricing.
There are signs of broader support for the sector in the study with 57% of professional investors saying their organisation’s appetite for alternative assets is increasing while 43% believe valuations are attractive on a medium to long-term view.
Optimism about the sector comes after a long decline in valuations and a series of high-profile shocks such as the collapse of FTX which have knocked confidence. Nearly six out of 10 (57%) questioned said their organisation had cut investment or sold all of their crypto holdings over the last six months. Around one in 12 (8%) said they had exited the digital assets sector.
However, nearly two-fifths (38%) saw the past six months as a buying opportunity with 12% saying they had dramatically increased investment in the sector despite the sell-off.
