Nearly 40% of Institutional Investors Had Crypto Exposure in 2023, Survey Shows
In a recent survey conducted by KPMG in Canada and the Canadian Association of Alternative Assets & Strategies, it was revealed that almost 40% of institutional investors had some exposure to crypto assets in 2023. This marks a notable increase from the 31% recorded in 2021.
The survey also highlighted a significant rise in the allocation of portfolios to crypto assets. A third of the respondents reported having at least 10% of their portfolio invested in cryptocurrencies, compared to only a fifth of respondents two years ago.
The growing interest of institutional investors in cryptocurrencies can be attributed to several factors. According to the survey, 67% of the respondents cited the maturing market and custody infrastructure as a significant factor, a significant increase from the 14% recorded in 2021. Additionally, 58% of respondents mentioned the strong market performance of cryptocurrencies as a motivating factor for their investments.
The performance of major cryptocurrencies such as Bitcoin and Ethereum has been impressive in recent years. Bitcoin, the largest cryptocurrency by market capitalization, witnessed a 150% increase in 2023 and has shown a nearly 60% gain year-to-date. Similarly, Ethereum, the second-largest cryptocurrency, has risen by approximately 60% in 2024.
The approval of spot Bitcoin exchange-traded funds (ETFs) by the US Securities and Exchange Commission (SEC) in January of this year has also played a significant role in increasing institutional investors’ access to the crypto asset class. This decision has made it easier for institutional investors to include cryptocurrencies in their portfolios after years of failed applications.
The increased interest in cryptocurrencies is not limited to institutional investors. A recent poll conducted by the Digital Assets Council of Financial Professionals indicates a sharp rise in the number of financial advisers planning to recommend crypto-related opportunities to their clients. The survey found that 35% of respondents intend to encourage their clients to invest in the digital assets space, compared to 21% at the end of the previous year.
The growing interest in cryptocurrencies has resulted in major sell-side firms, including JPMorgan and AllianceBernstein, expanding their research coverage of digital assets. This expanded coverage has led to more sophisticated and nuanced conversations between investor relations professionals and institutional investors, with discussions focusing on advanced topics.
Hong Kong has also witnessed an increase in interest in cryptocurrencies, driven by regulatory clarity and the recent approvals of Bitcoin and Ethereum spot ETFs. OSL Group, a Hong Kong-listed digital assets company, has seen a significant uptick in interest from investors, prompting a more proactive investor relations approach.
As the crypto market continues to evolve and mature, institutional investors and financial professionals are increasingly recognizing the potential of digital assets and incorporating them into their investment strategies.