Institutional Investor Statistics - Fidelity Digital Assets
September was a wild month for crypto. The most bullish crypto news slipped through the cracks due to various bits of news containing FUD. Fidelity digital assets division did a study on what to expect from institutional investors.
Fidelity did a study on institutional digital asset investors.
The main bullish news that was passed by was a survey done by institutional players. We will walk through the report and dig into the information you need to know.
All this information is for educational and entertainment purposes only; I'm not a financial advisor. This is a study by Fidelity digital asset team and I'm breaking down the parts I thought were important.
Fidelity Digital Investments did a survey called the Institutional Investor Digital Assets Study. I'll reword it in simple terms as the report is quite extensive and wordy. 1,100 investors were posed questions from different countries, including respondents from Asia, United States, and Europe.
These investors were made up of different groups varying from hedge funds, endowments, family groups, pension funds, and foundations. Fidelity Digital Investments is Fideility's crypto department that wanted to help everyone have a better understanding of what type of institutional players are out there. As of now, we often hear, "wait until the institutional players start investing" is often thrown around. Fidelity wanted to define what is out there so crypto investors can know with quantitative data.
I'm not paid by or sponsored by Fidelity to write about any of this, it's simply part of the research process I have when writing these articles. Fidelity seems to be expanding its horizons when it comes to cryptocurrency. When Bitcoin was at its yearly lows, Fidelity put out some articles about how they are looking to expand their digital asset team by 70%. They clearly have cryptocurrency in their sights and are looking to help their clientele handle their crypto.
I worked for a very large Financial planning company before starting the blog, and it came down from the top that we don't do crypto. Seeing Fidelity come out and be so forward with cryptocurrency is a breath of fresh air.
This shows the one of the worlds largest asset managers is bullish on crypto. Yet another bit of news that suggests that many different types of institutional players are out there, ranging from investors to large asset managers.
Fidelity has been lobbying the SEC to approve a Bitcoin ETF in private meetings according to a Bloomberg report.
Executives including Tom Jessop, president of Fidelity Digital Assets, met with SEC officials in a Sept. 8 video call, filings show. They laid out reasons why the regulator should approve the proposed product, including increased investor appetite for virtual currencies, the growth of Bitcoin holders and the existence of similar funds in other countries, according to a presentation from the meeting.
I'm going to dig into the report now and add some new context to help make sense of a few things.
Currently, about 52% of investors globally have an investment in digital crypto assets. Asia and Europe have a higher rate of investment than the U.S. Asian markets have adopted digital assets at a higher rate than anywhere else. The U.S. appears to have the slowest adoption rate of crypto assets. Although the adoption rate is lowest in the U.S. it is still encouraging to see the growth of interest surrounding digital assets.
This means that more than half a traditional investors have digital assets. 18% of American investors have their digital product investment through a traditional product. This means that 18% of American adopters aren't invested directly into a cryptocurrency but rather they are invested into an array of private fund offerings.
I'd be interested in seeing the age breakdown of these investors. I'd be willing to bet most younger investors are more comfortable investing directly into digital assets. There is likely a reason for the strange fear of investing directly into cryptocurrency.
The discrepancies between the U.S., Europe, and Asia could also
be influenced by regional regulations. The U.S. market is guided
largely by a limited number of national regulators – though there
are state-level requirements as well – while European and Asian
countries follow a more localized jurisdictional approach
throughout each country.
There are very few national regulations that guide investment in digital assets in the U.S. where the guidance is a lot more clear in other countries. If we were to compare pros and cons to this situation.
Pro: U.S. investors would likely pile into an ETF heavily once accepted by the SEC allowing for major benefits and growth for investors.
Con: U.S. investors are less likely to accumulate digital assets and will likely forgo future crypto gains.
Digital Asset Purchase Intent
Native crypto hedge funds and venture capital funds have highest adoptions levels
This chart may be a bit to chew so lets break it down. This shows the current adoption of digital assets based on holding from the different types of investors. This gives us a holistic view of investor types into the digital assets. It helps us to understand how adoption rates are affected globally and allows us to set some type of standard. If one country starts to have major success from high net worth individuals, most likely other country investors would follow suit. Time will tell with these things.
Perception of Digital Assets
One way to judge how things are going is to measure the perception of digital assets, Fidelity does this and breaks down the numbers in a very clear way.
U.S. digital asset perception
Year over year, U.S. investors increased their positive perception by 5 percentage points. American investors still had more polarized perceptions than European and Asian investors.
European digital asset perception
European investors increased their positive perception of digital assets by 14 percentage points. Nearly half of the population being more comfortable investing into cryptocurrency.
Asian digital asset perception
The most favorable perception of digital assets was the Asian investors. 21% of Asians hold a neutral perception of digital assets coming in at a whopping 84% with either a positive or neutral perceptions on cryptocurrency.
Ultimately, the perception of digital assets has increased, demonstrating bullish feelings globally, and the numbers are far higher than they were two years ago.
Barriers to adoption
Let us face it; cryptocurrency volatility has many people concerned. Not everyone is cut out to watch their portfolio have violent swings. Traditional investors in the stock market have a complete meltdown when the stock market dips 5%. It is common enough to have your digital asset portfolio swing 15% or more within a day.
Digital asset volatility
Volatility is likely keeping older generation investors out of the crypto markets as they fear the extreme ups and downs that are on the regular. Price volatility maintains the most significant reason for higher adoption rates. 54% of investors surveyed conveyed they dislike the fact that there isn't much stability and that is what makes them hesitant to invest.
The past year has seen some especially volatile swings in digital assets and is frequently harped on by the mainstream media.
Hard to value digital assets
Valuation of a stock is by far easier to make the correlation of price. There is so much more data and assets that back the price of a stock. Company income, company debt, new products, etc.. Gold, something that is more comparable to digital assets than a stock is even easier to compare the value as gold has practical uses as well. It is something you can hold, it is used as wedding rings, used in semi-conductors, and many other practical use cases.
Market manipulation concerns
With any investment there are huge players in the game that have a strong impact on the overall markets. We see this time and time again in the markets as big players tend to make waves in the digital asset world. This creates a lot of fear with the retail investor into crypto. These individuals or groups of people are called whales.
I wrote an article about crypto whales here if you'd like to learn more about how to navigate the massive market fluctuations they cause.
Understanding these statistics will improve your diamond hand status as you buy and hold your digital assets. Information like this needs to be part of your world when investing into an asset that gets this much attention. Data will back your decisions when you make trades with your investments both in and out of the digital asset world. You need to learn these patterns and behaviors so that you become a better investor.
As always thank you all for reading, I appreciate any comments left and always update these articles if more is needed.
Disclaimer: The above references an opinion and is for information purposes only. It is not intended to be investment advice. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other Content on the Site before making any decisions based on such information or other Content.
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