Cointelegraph Research released the first “Discovering Institutional Demand for Digital Assets Report”, which also focuses on developments in the DACH region (Austria, Germany, Liechtenstein and Switzerland).
Highlights:
- The total assets under management managed by the 55 asset allocators that participated in the survey is over €719 billion ($840.8bn), which is more than double the entire market capitalization of the digital asset market. Out of those professional investors, 36% already have blockchain-inspired assets in their portfolio either through direct investment in cryptocurrencies, stablecoins, and security tokens or via funds, structured products, or futures.
- The respondents in the survey are managing at least €6 billion in blockchain investments or roughly 2% of the entire digital asset market capitalization.
- Out of the remaining 64% that have not yet invested, 39.29% plan to invest. This results in 61.15% of professional investors in the survey either already owning digital assets or planning to buy in the future.
- Bitcoin and Ethereum are still the most dominant cryptocurrencies. Around 88% and 75% of respondents exposed to cryptocurrencies have invested in these cryptocurrencies, respectively. However, institutional investors appear to be increasingly interested in security tokens. Out of the 39% of investors that plan to invest in the future, security tokens were more popular than Ethereum and other alternative coins.
- Smaller asset allocators, such as family offices and boutique wealth management companies, are more likely to invest in digital assets than larger financial service providers, such as banks and pension funds.
- There is still unmet demand for financial services and products. Survey results indicate that investors would be willing to pay for insurance for the loss of private keys if such products existed. Additionally, investors mentioned the desire to invest in blockchain-based venture capital funds and derivatives, although few products exist on the market currently.
- When comparing structure and strategy, the financial product that has attracted the most capital is a passive, single-asset structured product available for retail as well as professional investors.
- Professional investors are primarily interested in Bitcoin. The regulated crypto fund in the DACH region with the highest AuM relies on Bitcoin futures (no self-custody) and also only has exposure to bitcoin. No UCITS funds give the majority of the fund to cryptographic assets, and the UCITS that do have exposure to digital assets do not have direct exposure, but through futures or structured products. There is only one actively managed structured product for retail investors, the rest are for professional investors.
- The 1990s Internet boom attracted labor talent and capital from all over the world to California. In a similar fashion, the DACH region is one of the main hubs of blockchain innovation due to regulations built with the entrepreneur in mind, capital from investors, and banking access for crypto companies.