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Recently, Cointelegraph and Crypto Research Report jointly released a landmark research report. The report presents to readers the results of a research on digital assets conducted by more than 55 professional investment institutions.
Because professional institutional investors hold most of the world’s wealth, their interest in digital assets is the fundamental driving force that drives digital asset trading volume, prices, and innovation. The 55 respondents came from pension funds, insurance companies, banks, asset management companies and family wealth management offices.
- More than 30% of asset managers have invested in digital assets, while about 64% of respondents have not yet invested in this field
- Among the 64% of professional investors who have not yet ventured into the field of crypto asset investment, 39% of the respondents plan to add crypto asset investment to their portfolio
- Institutional investors are most interested in security tokens
- The most important consideration for professional investors when considering whether to invest in digital assets is their risk-return ratio. 53% of respondents rated this factor as “highly important”
- 25% of professional investors plan to purchase crypto assets at a later stage, and 14% of respondents plan to purchase crypto assets in the next 12 months
- 62% of respondents said they are most interested in data services in the crypto asset industry
- Compared with large financial service providers (such as banks and pension funds), smaller asset managers (such as family financial offices and large wealth management companies) are more likely to invest in digital assets
- 58% of respondents believe that the cost of infrastructure required for crypto assets and the service fees charged by industry experts are too high
- In 2020, Bitcoin investors are portrayed as young people with jobs. Men are twice as many as women. 29% of individual investors have a master’s degree, 22% have a university degree, and only 17% of Bitcoin investors have no education.
- Grayscale’s encrypted asset management scale increased from US$2 billion to US$5.9 billion, an increase of approximately 195%
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According to the data provided by PricewaterhouseCoopers’ “2020 Crypto Hedge Fund Report”, 90% of crypto hedge fund investors are either from family offices (48%) or from high-net-worth individuals (42%) (2020). The quarterly research report of Crypto Fund Research also mentioned that there is almost no shadow of pension funds among crypto fund investors (2020).
The report jointly issued by Cointelegraph and Crypto Research Report for general investment institutions and general investors just made up for this part of the vacancy, showing readers the views of traditional financial institutions such as pension funds, insurance companies, and banks on digital assets. In this way, individual investors can have a relatively complete understanding of the investment products most popular with professional investors in the current digital asset market.
1. Among these professional investors, 36% of investors already have blockchain-related assets in their portfolios
The total assets under management of 55 professional investors participating in the survey exceeded 719 billion euros, more than twice the total market value of the digital asset market. Most of these digital asset investments are made through direct investment in encrypted assets, tokens, or through encrypted funds, structured products or futures.
The professional investors participating in the survey are mainly from European German-speaking countries. Most of the respondents came from Switzerland (16), followed by Austria (10), then Germany (7) and Liechtenstein (6).
Among them, respondents from Switzerland have the most assets under management at 278 billion euros. The interviewee from Austria has the largest company. 83% of respondents work in companies with fewer than 50 employees. The total number of people from the company’s asset allocation decision-making level is 42, of which only 3 are women and the remaining 39 are men. The median age of the respondents was 47.5 years (cointelegraph, 2020).
Figure 1. Distribution of professional investors interviewed
The survey results show that more than one-third of asset managers have invested in digital assets, while about 64% of respondents have not yet invested in this field. Among institutional investors who own digital assets, approximately 69% of respondents invest 10% or less of their assets in encrypted assets. More than one-third of the respondents only invested 1% or less of their assets in crypto assets (cointelegraph, 2020).
Figure 3. Investment in the field of crypto assets as a percentage of total assets under management
2. Bitcoin outperforms stocks, fixed income assets, real estate and gold
Affected by the epidemic, many investors chose to cash out in mid-March to reduce investment risks. The price of Bitcoin also fell from its peak (February 19, 2020) to its trough (March 17, 2020), losing 50% of its value. Since then, the price of Bitcoin has rebounded by 115% and broke through $10,000.
Most of the professional investors interviewed have set foot in the field of digital assets for the first time in the past two years. In 2018, nearly 31% of respondents invested in crypto assets. The price of Bitcoin hit a record high in mid-December 2017. At that time, the price of each Bitcoin was close to US$20,000, and the total market value of Bitcoin reached 334 billion. US dollar (cointelegraph, 2020).
Figure 4. The interviewee’s company first set foot in
Year of investment in the field of digital assets
3. Digital asset investors hold fewer bonds, while commodity futures and cash reserves are more
Another interesting finding is that there is a big difference between professional investors who have been involved in digital asset investment and professional investors who have not tried digital asset-related investments in the allocation of investment portfolios. Compared with investors who have no exposure to digital assets, the spirit of digital asset investors and the digital asset industry actually coincide (cointelegraph, 2020).
Figure 5. Average asset allocation of institutional investors
4. Bitcoin and Ethereum as mainstream crypto assets are also favored by professional investors
88% of respondents have been exposed to encrypted assets, and 75% of respondents have invested in these encrypted assets. In addition, about 31% of respondents invested in Litecoin and XRP. A quarter of respondents responded that they have invested in “other crypto assets” including Tezos, EOS, Stellar, Binance Coin, Cardano, Bitcoin Cash and Bitcoin Satoshi (cointelegraph, 2020).
Figure 6. What kind of crypto assets your company has invested in
Among the 64% of professional investors who have not yet invested in the field of encrypted assets, 39% of respondents plan to add investment in encrypted assets to their portfolios. A quarter of professional investors plan to purchase crypto assets later, and 14% of respondents plan to purchase them in the next 12 months.
Figure 7. Will there be investments in the field of crypto assets in the future?
Among professional investors who said they would invest in the field of digital assets, the most popular ones are Bitcoin and security tokens. Institutional investors are most interested in securities tokens, which may be related to the relatively complete regulatory system of securities tokens. In this way, in the event of economic disputes, lawsuits can be brought.
Figure 8. Which types of crypto assets are interested in future investments
5. The most important consideration for professional investors when considering whether to invest in digital assets is their risk-return ratio
According to Cointelegraph’s survey results, 53% of respondents rated the risk-return ratio as “highly important” (2020).
In the consideration of asset “diversification” and related evaluations of “My company firmly believes that technology is important in the future”, most of the respondents’ responses are concentrated in the middle, which means that such factors are also more important.
Another noteworthy point in the survey results is that customers’ requirements for digital asset-related investments are not very relevant to asset managers’ decisions on whether to invest in these assets.
As one interviewee said, if customers request investment in the field of digital assets, they will list it as the primary consideration. However, so far, no customer has requested to add the configuration of digital assets, but investment institutions still provide customers with The layout of digital assets has been carried out.
Figure 9. Whether the impact of professional investors is
Factors of investment in the field of digital assets
Professional groups that want to invest in blockchain financial products include pension funds, insurance companies, university endowments, high net worth individuals (HNWI), family wealth management offices, asset management companies, banks, and funds from all over the world.
Usually, these investors will consider whether the regulatory system of the encrypted assets they invest in is sound and whether the products are easy to access. Some professional investors want to invest in new asset classes with high risky yields, while others focus more on product diversification.
Currently in Europe, there are many investment products with sound regulatory systems in the crypto asset market for investors to choose from, including multiple single products, index products, derivative products, and so on. The Cointelegraph report found that professional investors prefer to invest directly by purchasing digital assets on exchanges (2020).
Figure 10. Your company is in the field of digital assets
What is the ideal way to invest?
When these professional investors were asked which services related to digital assets are interested in, 62% of respondents said they are most interested in data services.
The leading data providers in the digital asset industry include Coinmetrics, Coinmarketcap.com and Cryptocompare. In Europe, Santiment and IntotheBlock also provide the public with relevant data on digital assets every month.
The next service of interest is related to the digital asset exchange (cointelegraph, 2020).
Figure 11. Professional investors’ investment in crypto assets
Which related services are of interest
The professional investors in this survey are from trusts/foundations, small asset managers (less than 100 million euros), medium asset managers (between 100 million euros and 1 billion euros), and large asset managers (over 1 billion euros). Euros), insurance companies, pension funds, high net worth individuals, family offices and banks.
Most of the respondents are small asset managers and high-net-worth individuals, and they account for 32% of the total number of respondents.
According to the survey results, compared with large financial service providers (such as banks and pension funds), smaller asset managers (such as family wealth management offices and large wealth management companies) are more likely to invest in digital assets.
All small asset managers and family financial offices interviewed responded that they already own or plan to own digital assets in the future. In contrast, the two pension funds surveyed have no such plans. One of the three insurance companies surveyed holds or plans to hold digital assets, and two of the six surveyed banks hold or plan to hold digital assets. Hold digital assets.
Figure 13. Different investment institutions hold or plan
Percentage of digital assets held
6. The infrastructure fees of encrypted assets and the excessively high service fees charged by industry experts are also one of the main reasons preventing traditional investment institutions from entering the field of encrypted assets
For example, in a survey by Cointelegraph, a bank stated that they are reluctant to purchase digital asset system software because they feel that the price of infrastructure and services is too high, and asset custody services are particularly expensive.
Interviewed banks believe that the main reason for the high prices is the lack of competition in the market. As more and more traditional investors enter the digital asset industry, their infrastructure fees and professional service prices should decline (2020).
Figure 14. Do respondents think they are currently experts in crypto assets
The service fee charged is too high
When asked how these traditional financial intermediaries understand the blockchain, the top-ranked source is encouraging employees to study the blockchain during working hours and communicate within the company. There are also conferences and webinars about crypto assets. Help increase employees’ interest in blockchain.
Education and training related to digital assets are becoming more and more popular, but respondents usually do not rely on hiring external consultants or attending university courses to learn more about blockchain.
Figure 15. Obtained by traditional financial intermediaries
Channels of blockchain-related knowledge
Some interviewees stated that they have privately invested in Bitcoin and other encrypted assets, while their institutions have not made any direct investments.
Most of the respondents in this survey have high decision-making capabilities within the company. The reason for this phenomenon may be that asset managers are more aware of risk aversion when investing on behalf of others than when investing in their own assets.
Figure 16. Traditional financial intermediary investors
Proportion of holding crypto assets
According to Cointelegraph’s survey, most of the financial institution investors interviewed have a master’s degree, followed by a university degree. This rule also applies to individual investors who invest in Bitcoin.
In the “Bitcoin Investor Research” published by Grayscale, the portraits of Bitcoin investors in 2020 are young people who have jobs. Among them, men are twice as many as women, and 29% of investors have master degrees and 22% have universities. Academic qualifications, only 17% of Bitcoin investors have no academic qualifications (2020).
Grayscale, the world’s largest crypto asset management company, will continue to increase the number of crypto assets it owns in 2020.
According to the “third quarter digital asset investment report” issued by Grayscale, it is not difficult to find that the digital assets managed by Grayscale hit a record high in the third quarter of 2020, reflecting the continuous growth of its interest in digital asset investment. .
From the beginning of 2020 to the present, Grayscale’s encrypted asset management scale has increased from US$2 billion to US$5.9 billion, an increase of approximately 195% (2020).
Figure 20. Scale of gray management assets