Seven out of ten institutional investors expect to invest in or buy digital assets in the future, even though price volatility is the main obstacle for newcomers, according to a study of Fidelity’s cryptocurrency business. More than half of the 1,100 institutional investors surveyed globally by Coalition Greenwich on behalf of Fidelity Digital Assets between December and April said they had investments in digital assets.
Around 90% of those looking to invest in the future said they expect their company’s or their clients’ portfolios to include investments in digital assets within the next five years, according to the study.
This included direct cryptocurrency investments or exposure through stocks of cryptocurrency companies or other investment products. Respondents included high net worth investors, family offices, digital and traditional hedge funds, financial advisors, and foundations.
Founded in 2018, Fidelity Digital Assets is the cryptocurrency business of Boston-based Fidelity Investments, providing institutional investors with custody and execution services for assets such as Bitcoin. The company was one of the first mainstream financial services providers to adopt cryptocurrencies, which have increasingly attracted established financial institutions.
TP ICAP, the world’s largest inter-dealer broker, announced late last month that it was launching a cryptocurrency trading platform with the digital asset custodian from Fidelity and Standard Chartered. Despite mainstream interest, cryptocurrency prices and trading volumes have plummeted. Bitcoin has fallen around 50% since its high in April.
Companies surveyed cited price volatility as the top obstacle to new investors, followed by a lack of fundamentals to assess value and concerns about market manipulation. A survey by JPMorgan Chase & Co last month found that only 10% of institutional investment firms trade cryptocurrencies, with nearly half referring to the emerging asset class as “rat poison” or predicting it would be a passing fad.