Professional investors are increasingly confident on 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 Nickel Digital Asset Management (Nickel), Europe’s regulated and award-winning digital assets hedge fund founded by Bankers Trust, Goldman Sachs and JPMorgan alumni.
Nickel commissioned research with 200 institutional investors and wealth managers from across seven countries who collectively manage around USD2.85 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.
Its study found 66 per cent plan to increase or start investment in crypto and digital assets over the next six months including 12 per cent who say their organisation will dramatically increase investment and 3 per cent who say they will invest for the first time.
Their outlook is even more positive when taking a five-year view of the sector, the firm says, with 38 per cent saying the current investment opportunities in the sector are very attractive while 46 per cent saying they are quite attractive. Just 17 per cent 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 per cent expect dramatic improvements in the regulatory environment while 63 per cent predict a bounce in pricing.
There are signs of broader support for the sector in the study with 57 per cent of professional investors saying their organisation’s appetite for alternative assets is increasing while 43 per cent 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 per cent) questioned said their organisation had cut investment or sold all of their crypto holdings over the last six months. Around one in 12 (8 per cent) said they had exited the digital assets sector.
However, nearly two-fifths (38 per cent) saw the past six months as a buying opportunity with 12 per cent saying they had dramatically increased investment in the sector despite the sell-off.
Anatoly Crachilov, CEO and Founding Partner at Nickel Digital, says: “It will come as no surprise that the sector has taken a reputational hit over the last year but it is great to see investor’s belief on the fundamentals of the sector has not changed due to the failure of a select few centralised entities. This is especially evident from investors’ long-term views which show the sector is here to stay and no longer on the fringe of the investment world.”
