Fidelity: 84% of institutional investors in the US and Europe are interested in purchasing digital asset investment products

Author: Chen Zou

Source: Bitpush.News

According to new insights from Fidelity Digital Assets' 2021 Institutional Investor Digital Assets Study, the majority of institutional investors in the U.S. and Europe (84%) are interested in purchasing institutional investment products that hold digital assets, with U.S. investors preferring to access these products through traditional financial firms. Surveyed investors indicated that when evaluating institutional investment opportunities in this space, fund managers with established cryptocurrency experience are their top consideration, followed by fees and performance. While investors from the three surveyed regions (Asia, Europe, and the U.S.) show strong interest in investment products, direct purchases of digital assets remain the most common investment method among global institutional investors.

Fidelity Digital Assets SM President Tom Jessop stated, "The expressed interest in directly owning digital assets or through various investment products once again underscores the maturity of the digital asset market, the diversity of participants, and the progress these investors are making in how they view the role of digital assets in their portfolios. We have reached a turning point, with many institutions deepening their commitment to this market and seeking new investment opportunities to express their interest in their portfolios. In some cases, they are looking to include other digital assets beyond Bitcoin."

Current Investment Allocation

Among the surveyed investors, digital assets are most commonly viewed as an alternative asset; however, nearly a quarter consider them an independent asset class. Today, one-third of respondents directly invest in digital assets, 28% purchase investment products that hold digital assets, and 16% gain exposure through futures contracts. Nearly a quarter of the surveyed institutional investors own Bitcoin, and one-fifth own Ethereum.

Preliminary research results released in July showed that over half of the surveyed institutional investors currently invest in digital assets, with adoption rates in the U.S. and Europe rising year over year. All surveyed institutional sectors reported having made some level of investment; however, some institutions are notably more active in this space than others.

In the U.S., besides crypto hedge funds and venture capital funds, surveyed family asset management and financial advisory firms are the most active, with adoption rates increasing by 28 and 20 percentage points year over year, respectively.

In Europe, following crypto hedge funds and venture capital funds, the surveyed high-net-worth investors and financial advisors are the most active in their investments.

Institutional Investment Outlook

Seven out of ten surveyed investors plan to invest in digital assets in the future. U.S. institutional investors are expected to continue shifting towards investment products that hold digital assets, while European and Asian investors' future preference is for direct purchases.

Overall, surveyed institutional investors expressed a strong preference for actively managed and multi-digital asset funds, although one-third indicated interest in both single and multi-asset products. When considering potential product structures, 44% of surveyed investors found Bitcoin ETFs the most appealing, followed by actively managed multi-digital asset funds (41%). Among surveyed investors in the U.S. and Europe, more than one-sixth expressed neutral or positive views on Bitcoin ETFs.

Fidelity Digital Fund Managing Director Peter Jubber said, "The data continues to show that institutional investors expect the digital asset industry to align more closely with other asset classes, whether through a variety of product types covering various investment strategies or the ability to access digital asset investments through traditional financial firms. The growing interest across institutional sectors emphasizes the demand for a diverse set of products and solutions to meet investors' needs in their digital asset journey."

Investors Remain Open to Tokenized Assets

The study also examined investors' views on tokenized assets and the potential of U.S. dollar-backed central bank digital currencies (CBDCs). Among the surveyed investors, nearly 60% indicated they would be willing to invest in tokenized real-world assets, with most believing that real estate (27%), precious metals (19%), and stocks (18%) have the greatest tokenization potential. Fractional ownership (lower minimum investment), liquidity, and price transparency were considered the main advantages of tokenization. Among the three surveyed regions, crypto hedge funds and venture capital funds, high-net-worth investors, and financial advisors were the most open to investing in tokenized assets.

More than half of the surveyed investors believe that U.S. dollar-backed CBDCs could complete their infrastructure within the next five years, with crypto hedge funds and venture capital funds expressing the strongest belief in the emergence of a digital dollar. While nearly 70% of surveyed investors globally hold neutral to positive views on U.S. dollar-backed CBDCs, institutional investors in Asia and Europe are more optimistic than their U.S. counterparts.