Institutional investors are increasingly valuing the significance of digital assets in their diversified investment portfolios, according to new research from London-based regulated digital assets hedge fund Nickel Digital Asset Management.
The research highlights a growing consensus on the incorporation of digital assets to ensure diversification.
According to the study, which encompassed institutional investors and wealth managers across seven countries managing a combined total of $3.5 trillion, a noteworthy 92% believe digital assets play a crucial role in portfolios.
However, a majority (66%) opine that digital assets should maintain a moderate presence. In contrast, 32% see a more significant role for these assets, while 39% suggest a minimal role. Interestingly, only a small fraction (7%) believes digital assets should be excluded altogether.
Another significant finding from Nickel’s study is the rising optimism around fund launches in the digital assets domain. 62% of the respondents anticipate a rebound in digital asset-focused fund launches within the upcoming year.
However, backing from a major financial institution remains a critical factor for investment. An overwhelming 96% assert the importance of this backing, with 57% emphasizing its utmost importance.
Tokenization, the digital representation of assets on a blockchain, is another trend catching the eye of institutional investors. A robust 85% project growth in tokenization in the upcoming three years, with a quarter of those predicting a dramatic surge.
However, there are still hurdles to broader adoption. Volatility stands out as the primary concern, with 51% of the skeptical investors highlighting it. Security concerns and a lack of understanding about the sector follow closely at 45% and 40%, respectively. Regulatory concerns seem less pressing, with only 34% expressing apprehensions.
Anatoly Crachilov, CEO and Founding Partner at Nickel Digital, commented on the findings:
The diversification potential of digital assets is gradually gaining recognition among institutional investors and wealth managers.” He added, “While opinions differ, a moderate role for digital assets aligns with expert views on how they can bolster performance.
Nickel Digital Asset Management, esteemed for its risk management and consistent performance, serves as a bridge for traditional investors into the digital assets market, offering an array of strategy solutions tailored for various risk profiles.
