2024
has
been
an
active
year
for
crypto
investments.
Connor
Farley
from
Truvius
breaks
down
institutional
investment
trends,
interests,
perceptions,
and
how
they
have
evolved
over
recent
years.
I’d
like
to
welcome
a
new
contributor,
Marissa
Kim
from
Abra
Capital
Management,
who
provides
insights
in
the
Ask
an
Expert
section
about
supporting
client’s
investment
interest
in
cryptocurrencies.
You’re
reading
Crypto
for
Advisors,
CoinDesk’s
weekly
newsletter
that
unpacks
digital
assets
for
financial
advisors.
Subscribe
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Thursday.
Measuring
Trends
in
Institutional
Interest
in
Crypto
Since
2019,
the
crypto-focused
subset
of
Fidelity’s
institutional
business
has
published
a
survey
called
the
“Institutional
Investor
Digital
Assets
Study,”
measuring
trends
in
sentiment
and
adoption
of
crypto
investing
among
institutional
investors
globally.
Overall,
the
2023
survey
depicts
a
generally
sturdy
but
still
mixed
institutional
outlook
toward
crypto
on
the
back
of
a
turbulent
2022.
Trends
Reflecting
Positive
Sentiment
-
Half
of
high-net-worth
investors
maintained
a
positive
perception
of
digital
assets,
and
nearly
a
third
have
been
invested
in
them
for
more
than
two
years. -
Positive
perception
and
investment
in
digital
assets
are
inversely
correlated
with
age:
76%
of
institutional
investors
under
35
currently
invest
in
digital
assets
compared
to
18%
of
investors
65
and
older.
Trends
Reflecting
Negative
Sentiment
-
Overall
familiarity,
perception
and
investment
in
digital
assets
fell
for
the
first
time
since
the
survey
began
in
2019. -
Price
volatility
and
regulatory
concerns
were
the
two
largest
obstacles
to
investing
in
digital
assets,
as
reported
by
U.S.
survey
participants. -
“Fraud/scandals”
and
“bad
press/news”
were
the
two
biggest
drivers
of
worsened
views
toward
digital
assets.
The
survey
didn’t
elaborate
on
these
categories,
but
institutions
likely
have
the
FTX
saga
in
mind.
It’s
important
to
note
the
latest
survey
only
spans
May
30,
2023,
to
Oct.
6,
2023,
missing
a
critical
year-end
period
during
which
bitcoin
rose
from
approximately
$28,000
to
$42,300,
driven
largely
by
anticipation
of
the
SEC’s
approval
of
spot
bitcoin
ETFs
which
occurred
later,
in
January
of
2024.
Perceptions
have
likely
evolved
meaningfully
since
the
start
of
2024
following
crypto’s
market
capitalization
climbing
above
$2.5
trillion,
Bitcoin
surging
to
nearly
$74,000,
and
the
SEC’s
approval
of
bitcoin
and
soon
Ether
spot
ETFs.
What
to
look
for
in
2024
Arguably,
the
biggest
market
moments
in
the
history
of
digital
assets
occurred
after
this
survey
was
conducted,
namely
actions
that
reduce
regulatory
uncertainty,
which
may,
in
turn,
reduce
price
volatility
and
improve
investment
options
for
investors.
Will
the
surprise
SEC
approval
of
spot
Ether
ETFs
diminish
regulatory
concerns
among
institutions?
The
digital
asset
market
has
begun
transitioning
from
early
adoption
to
mass
adoption.
A
sea
change
in
industry
leadership,
product
development,
and
fiduciary
commitment
swept
crypto
in
2023
and
early
into
2024,
enabling
a
new
suite
of
increasingly
institutional-grade
on-ramps
into
the
asset
class.
This
change
may
take
time
to
permeate
through
to
institutional
allocations
more
foundationally,
but
the
rapid
adoption
of
spot
bitcoin
ETFs
following
the
SEC’s
approval
(aggregate
ETF
AUM
doubled
from
approximately
$30
billion
in
January
to
nearly
$60
billion
as
of
mid-June)
may
provide
early
indications
of
stronger
institutional
interest
in
crypto.
Will
concerns
about
price
volatility
persist?
Volatility
for
the
digital
asset
class
remains
elevated
compared
to
other
asset
classes,
but
it
has
trended
down
over
time
and
may
continue
to
do
so
as
improving
regulatory
conditions
and
institution-friendly
product
offerings
potentially
stabilize
markets.
Investors
should
also
consider
not
just
crypto
volatility
but
the
risk-adjusted
return
profile
of
various
blockchain
assets.
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Will
institutional
investments
flow
primarily
into
spot
BTC
and
ETH
ETFs,
or
will
they
be
spread
across
investment
structures
(SMAs,
private
funds,
VC)
offering
diversified
exposure
to
blockchain
assets
beyond
the
two
mega
caps?
Supported
by
major
advances
in
industry
infrastructure
in
2023
spanning
custody,
trading,
and
asset
management,
investors
now
have
a
better
–
but
still
nascent
–
array
of
product
options
and
investment
platforms
to
not
only
help
avoid
the
pitfalls
of
early-adopter
risk
but
also
to
exploit
early-adopter
premia.
These
options,
in
addition
to
ETFs,
include
the
increasingly
prevalent
SMA
direct-index
vehicle.
With
the
combined
surge
in
blockchain
data
providers
and
the
growing
presence
of
systematic
digital
asset
managers,
will
institutions
become
more
familiar
with
crypto
fundamentals
and
methods
of
digital
asset
valuation?
Some
37%
of
2023
respondents
cited
a
“lack
of
fundamentals
to
gauge
appropriate
value”
as
a
barrier
to
investing.
This
large
number
reflects
the
asset
class’s
emerging
nature
and
the
learning
curve
associated
with
measuring
blockchain
value.
However,
this
number
is
down
from
44%
in
2021.
It
may
continue
to
fall
as
investors
become
increasingly
familiar
with
blockchain
technology
and
the
unique
ways
to
analyze
a
protocol’s
value
to
users.
Ask
an
Expert
Q:
What
else
should
I
be
thinking
about
aside
from
buying
and
holding
Bitcoin?
A:
If
clients
want
exposure
to
digital
assets,
it’s
advisable
to
diversify
that
exposure,
as
you
would
with
traditional
assets.
Bitcoin
should
be
the
core
of
every
portfolio.
Still,
consideration
is
increasingly
being
given
to
ETH
and
SOL,
given
that
Ethereum
is
becoming
the
chain
of
choice
for
institutional
applications
and
Solana
is
for
consumer
payment
applications.
Financial
advisors
should
not
leave
their
clients’
assets
on
exchanges
but
utilize
secure
custody
solutions
to
retain
ownership
and
access
to
their
client’s
assets.
Q:
Should
I
get
exposure
through
ETFs?
A:
While
ETFs
are
convenient
for
retail
investors,
they
lack
the
flexibility
and
opportunities
available
from
holding
actual
digital
assets.
Digital
assets
trade
24/7,
unlike
ETFs,
which
only
trade
during
market
hours.
Moreover,
ETFs
do
not
enable
yield
generation,
which
can
be
an
attractive
income
stream
and
cannot
be
used
as
collateral
for
borrowing.
For
clients
with
large
BTC
portfolios,
borrowing
against
their
digital
assets
may
be
preferable
to
selling
and
incurring
capital
gains
tax.
Q.
Which
client
demographic
are
digital
assets
most
suitable
for?
A:
Understanding
the
suitability
of
digital
assets
requires
assessing
clients’
risk
tolerance
and
wealth
management
goals.
For
low-risk
clients,
digital
assets
may
serve
as
a
store
of
value,
with
opportunities
to
generate
attractive
yields
through
staking.
High-risk
clients
may
instead
desire
access
to
venture
capital
investments
in
early-stage
blockchain
projects
or
higher-yielding
DeFi
investment
strategies.
Tailoring
these
approaches
to
individual
needs
helps
integrate
digital
assets
into
a
comprehensive
wealth
management
plan.
Keep
Reading
-
SEC’s
head
of
the
Crypto
Asset
and
Cyber
Unit
in
the
Division
of
Enforcement
announced
his
departure
from
the
agency
on
Friday.
Note:
The
views
expressed
in
this
column
are
those
of
the
author
and
do
not
necessarily
reflect
those
of
CoinDesk,
Inc.
or
its
owners
and
affiliates.
