Fidelity’s study found an increased appetite for bitcoin exposure across institutional investors but still lacking understanding.
Fidelity Digital Assets published the 2021 Institutional Investor Digital Assets Study that tracked institutional investor’s behavior in the face of the delicate situation traditional markets endured for the past year. However, the study found that those market conditions were actually a catalyst for many investors to jump into Bitcoin and other cryptocurrencies, increasing the likelihood of investing in such assets for 44% of investors.
The study also found that European investors showed a more progressive view towards bitcoin than Americans across all the study’s categories, similar to last year’s survey. However, Asian investors were the ones to show the most significant inclination towards investing in bitcoin and cryptocurrency, with 70% of those surveyed saying they were currently holders of these assets. This year was the first time that Asian investors were part of the survey.
“Across Europe and the U.S., we saw year-over-year growth across nearly every category, including perception and appeal, current exposure, and propensity for future investment,” the report said.
Considering all investors surveyed across the globe, 52% of respondents said they invest in bitcoin or cryptocurrency, and 9 in 10 investors find those assets appealing. Notably, 84% of European high-net-worth investors said they are invested in the asset class. The most appealing attribute of bitcoin and cryptocurrency shared by institutions was “high potential upside” for future price appreciation.
Fidelity also researched what institutional investors currently see as the biggest barriers to adoption. The firm found that 54% of the respondents see price volatility as one of the greatest barriers, while 44% shared a “lack of fundamentals to gauge appropriate value” as the primary concern.
That is an interesting point made by the investors surveyed because although the broader “cryptocurrencies” do lack fundamentals, Bitcoin is perhaps the most well-founded asset today. In a world where central bank monetary policy distorts prices, the immutable and incorruptible Bitcoin network serves as a source of truth in the form of sound money that cannot be debased or influenced at the expense of the purchasing power of regular people worldwide.
On the other hand, volatility is real, but it is a function of the early adoption stage Bitcoin is currently in. As Bitcoin adoption grows, the price is set to stabilize accordingly, ultimately leading to hyperbitcoinization. Both concerns, volatility and lacking fundamentals, are more a product of mainstream media agenda and lacking understanding than issues in Bitcoin itself — something Fidelity also acknowledged in their report.
“Overall, the top concerns cited by investors surveyed tend to align with the primary narratives frequently seen in media coverage of digital assets and bitcoin specifically,” the report said. “As a nascent industry, continued education is important because institutional investors – as well as the financial services industry at large – are still discovering the full potential of the underlying technology.”
Overall market sentiment towards Bitcoin and cryptocurrency is “neutral-to-positive,” the report found. Of all investors surveyed, 70% had such a perception of these assets, while in the U.S., 79% of family offices demonstrated that sentiment. In Asia, virtually all financial advisors had a “neutral-to-positive” perception of digital assets.
The more Bitcoin grows and survives the test of time, the more prominent names in the investment spectrum will start delving more carefully into the intricacies of the peer-to-peer monetary network. With a better understanding, more significant allocation will follow as the potential asymmetric upside becomes obvious. In the end, many might notice the world-transforming characteristics of Bitcoin and how positive it can be for the individual and society at large.
