Institutional Investors Will Flood the Crypto Market within Next 5 Years: Fidelity Research

institutional-investors-fidelity-investments-report Photo: Fidelity Investments / Twitter

The results of the survey conducted by Fidelity Investments indicate that opinions about cryptos are changing for the better, as nearly half of the respondents see digital currencies as 'innovative technology'.

Fidelity Investments, multinational financial services corporation with $2.5 trillion in assets under management, has carried out research to find out what investors think of digital currencies. As the research results show, the interest of institutional investors to cryptos is likely to increase over the next five years.

Fidelity Investments surveyed 441 institutional investors from the USA, including pensions, hedge funds, financial advisors, and endowments. 22 percent of respondents have already purchased cryptocurrency, which is a significant increase compared with near-zero institutional investment in 2016.

According to the company's report, nearly seven in ten respondents find cryptos attractive. Four in ten are open to future investments in the next five years. 47 percent of those surveyed may consider having digital assets in their investment portfolios, however, the ways of holding digital assets vary. 57 percent prefer to invest in digital assets directly, while 72 percent favor investment products that hold digital assets.

Tom Jessop, president of Fidelity Digital Assets, said:

"We've seen a maturation of interest in digital assets from early adopters, like crypto hedge funds, to traditional institutional investors like family offices and endowments. More institutional investors are engaging with digital assets, either directly or through service providers, as the potential impact of blockchain technology on financial markets—new and old—becomes more readily apparent."

Jessop continued:

"Venture investment in the sector continues at a healthy pace, complemented by an increasing number of security token offerings (STOs), and the global regulatory environment remains cautiously constructive. Another indication of a growing ecosystem around digital assets is high transaction activity on the Bitcoin blockchain. Institutions are more aware of these developments now than they were six or twelve months ago, which is a positive sign for continued interest and adoption."
Mass Crypto Adoption Taking Place?

The results of the survey conducted by Fidelity Investments indicate that opinions about cryptos are changing for the better, as nearly half of the respondents see digital currencies as 'innovative technology' and cite their low correlation to other assets as the 'most appealing characteristic.'

Fidelity Investments commented:

"This institutional sentiment mirrors many of the positive developments we've observed. Venture investment continues, alongside good development work, and increasing regulatory conversations. Institutions are more aware of these developments now than they were six or twelve months ago. The people we talk with are actively scanning and observing what's going on, and considering how this technology would impact their business, and — ultimately — financial markets."

However, there are still some obstacles that prevent institutions from investing in cryptos. They include price volatility, lack of regulatory clarity and a lack of fundamentals.

Another problem is the issue of custody, as there are no readily available custody solutions, which means that institutional investors either need to take on risk via self-custody or refuse to invest in cryptos. And Fidelity Digital Assets aims to deal with this problem. Offering the 'same level of custodial service expected for other assets, despite the regulatory uncertainty', the company is working on increasing access to digital assets and expanding adoption of cryptos. 

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Tuesday, 20 August 2019
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