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A recent survey published by Sygnum, a prominent global digital asset banking group, reveals that institutional and professional investors are increasingly optimistic about the future of cryptocurrency. The survey indicates that 57% of these investors are planning to boost their long-term allocations to crypto assets. In addition, 65% express bullish sentiments regarding the long-term prospects of the market, while 63% intend to allocate more funds within the next 3 to 6 months.
Growing Confidence and Long-Term Outlook
According to the annual Future Finance survey by Sygnum, these findings highlight a pronounced appetite for risk and an increasing trust in digital assets. The report suggests that the sentiment within the market has the potential to “quickly turn” more bullish by 2025, anticipating higher allocations as investors gain confidence. Beyond 2025, the sentiment is described as “overwhelmingly bullish,” with respondents believing that the crypto market will solidify its position within the traditional finance landscape.
Mixed Short-Term Sentiments
Despite the long-term optimism, the report identifies a mixed short-term outlook among investors. While some respondents are ready to capitalize on the opportunities, others prefer to take a wait-and-see approach, closely monitoring market developments before making further commitments. Concerns regarding geopolitical tensions and macroeconomic instability are also noted, indicating that these factors may influence investor behavior in the near term.
Survey Insights and Participant Profiles
The Sygnum survey gathered insights from over 400 investors across 27 countries, with participants having an average of ten years of investment experience. These included banks, hedge funds, multi-family and single-family offices, DLT foundations, funds, and asset managers, among others. Notably, 83% of the respondents were already invested in crypto, showcasing a robust presence in the digital asset space. Remarkably, 53% reported that over 10% of their portfolios are allocated to crypto assets.
Risk Appetite and Future Investment Plans
A significant finding from the survey is that 63% of participants possess a high-risk appetite, indicating a comfort with the inherent volatility of cryptocurrency. Notably, 79% of respondents shared intentions to either increase their crypto asset allocations or make new investments within the next year. This level of confidence suggests a promising outlook for the market, even amidst ongoing concerns. Meanwhile, 36% indicated they would maintain their current allocation, likely awaiting clearer market signals before deciding on any changes.
Factors Influencing Investment Decisions
In terms of specific investment timelines, 31% of existing crypto investors plan to boost their allocations by the fourth quarter of 2024, while another 32% aim to increase their investments within the next six months. These investors anticipate that reduced geopolitical risks and post-US election stability might enhance market conditions, creating favorable opportunities for allocation increase. Additionally, key factors such as China’s stimulus package and anticipated changes in liquidity conditions are also influencing their investment strategies, with hopes that these will catalyze further inflows into Bitcoin and Ethereum exchange-traded funds (ETFs).
Emerging Investors and Future Inflows
The survey highlights a notable interest from traditional investors who are not currently engaged in crypto investments. Many of these potential new investors plan to enter the market in the next 12 months, with 27% expressing distinct plans to allocate resources in the future. However, more than half remain undecided, primarily due to the volatile performance of the crypto market in the third quarter of 2024 and the increasing macroeconomic risks.
Barriers to Entry and Investment Knowledge
Among the undecided investors, two-thirds indicated that they would be encouraged to invest in crypto as a safe haven and macro hedge. Nevertheless, 53% cited volatility as the primary barrier to entry, while 39% expressed concerns over security and custody issues. Interestingly, the historical challenge of regulatory uncertainty appears to have alleviated as 81% of respondents indicated that better information would enhance their willingness to invest. Furthermore, 76% reported possessing a strong understanding of crypto and blockchain technologies, primarily due to the growing involvement of traditional investors in the space.
Investment Preferences and Trends
The survey also revealed that 72% of respondents are open to investing in crypto assets, with single-family offices, external asset managers, and hedge funds showing the highest levels of openness. Banks exhibited a more varied perspective, with some completely opposed to crypto asset investments. The most attractive investment areas for respondents included Layer-1 assets (76%) and Web3 infrastructure (55%), while interest in decentralized finance (DeFi) has waned, possibly due to regulatory challenges.
Conclusion: The Future of Crypto Investments
Overall, the report suggests that there is a growing preference for well-established blockchain protocol coins, such as Bitcoin, Ethereum, and Solana. Notably, while only 13% limit themselves to investing exclusively in these coins, there has been a marked increase in interest toward stablecoins, with half of the respondents indicating they hold such assets. This reflects a wider trend of diversification among investors as they navigate the evolving landscape of digital assets.
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