74% of Institutions Plan to Buy Crypto: Fidelity Survey

Financial giant Fidelity has found that more institutions are invested in crypto than a year ago, despite the market downturn.

Fidelity found that 58% of surveyed investors reported owning digital assets in the first half of 2022, representing a 6% year-over-year increase, according to Fidelity Digital Assets’ fourth annual Institutional Investor Digital Assets Study published Thursday.

“While markets have faced headwinds in recent months, we believe digital asset fundamentals remain strong and the institutionalization of the market over the past few years has positioned it to weather recent events,” Fidelity Digital Assets president Tom Jessop said in a statement.

The survey included 1,052 institutional investors across Asia, Europe and the US.

Ownership of digital assets was highest in Asia, with 69% of institutions in the region reporting investments in the segment. This figure was lower in Europe (69%) and the US (42%), although the figures represented an increase of 11 points and 9 points respectively from a year ago.

Which institutions invest?

High-net-worth investors drove the gains in Europe and the US, while financial advisers also contributed to the increase in Europe.

Overall, global use of digital assets is highest among venture capital funds (87%), followed by high net worth individuals (82%) and advisors (73%).

Ark Invest Chief Operating Officer Tom Staudt told Blockworks earlier this month that advisors — a segment he said has long been ignored by the crypto industry — will be critical to mass crypto adoption. Ark and other companies, such as Franklin Templeton and Valkyrie Investments, launched crypto-focused separately managed accounts (SMAs) for investment professionals.

Despite the market slowdown, institutional investors have recently established an understanding of the technology and value proposition of digital assets, said Chris Kuiper, director of research for Fidelity Digital Assets. He added that the increase in infrastructure and investment products available to institutions is also likely to have contributed to higher adoption rates.

“Investors surveyed cited the high potential upside and innovative technology plays in this emerging industry, along with the enablement of decentralization, uncorrelation to other assets, and the current macro/inflationary environment, as appealing features of the asset class,” he told Blockworks.

Almost 40% of institutions buy digital assets directly, with bitcoin and ether being the most popular assets. Fidelity’s digital assets division is set to roll out ether trading to institutional clients on October 28, a spokesperson told Blockworks last week. Industry watchers have said that ether is likely to be a more attractive play for institutions following Ethereum’s transition from proof-of-work to proof-of-stake.

Of those surveyed, 35% said they buy investment products with crypto, while 30% buy investment products with digital asset companies and 20% get exposure via futures contracts.

Fidelity survey shows growing respect for crypto

About 35% of respondents believe digital assets should be seen as an independent investment class, up from 23% in 2021.

“This is one of many data points that validates trends we see in our own business: increased institutional participation and recognition of the maturation of the digital asset market and infrastructure,” Kuiper said.

Still, 74% of institutions surveyed said they plan to buy digital assets in the future.

The future preference to buy remained consistent year over year globally for financial advisors, family offices, pensions, crypto hedge funds and venture capital funds, as well as endowments and foundations.

Half of respondents cited price volatility as the biggest barrier to investing in crypto – according to the 2021 Fidelity study.

“While short-term price volatility is a characteristic somewhat inherent to this emerging asset class, many of the other concerns mentioned by respondents can be addressed as institutional investors move through the education journey,” Kuiper said.

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