Sygnum, a digital asset banking group, revealed the results of its annual Future Finance survey which analyzes the interests, market sentiment and behavior of investors active in the crypto market.
Conducted among 400+ respondents in 27 countries possessing an average of 10+ years of investment experience, the survey included a “diverse range of investment professionals from banks, hedge funds, multi- and single-family offices, DLT foundations, funds, and asset managers.”
One third of the respondents “are Sygnum clients and investors.”
63% of respondents assessed their risk appetite “as high, with the overall number who assessed their risk appetite as high or very-high increasing from the 2023 survey.”
More than half of respondent portfolios had in “excess of 10% allocated to digital assets, although percentages varied by investor type.”
Investment Strategies
- Single token investments (44%) remain the preferred strategy, followed by actively managed exposure (40%).
- 57% plan to increase their crypto allocations, with 31% planning to do so in the next quarter, and 32% in the next six months. Only 5% plan to decrease their allocations, and 2% remain undecided.
- The 36% who plan to maintain their positions may be awaiting further market confirmation or optimal market entry timing. However, with nearly half (46%) considering additional allocations in the next six months, the recent market rally may have accelerated some of these plans.
- The top motivation for investing in crypto is exposure to the crypto megatrend (62%), followed by portfolio diversification (52%) and access to a safe haven or macro hedge (45%).
Market Outlook
- 43% of Sygnum’s respondents signalled short term neutral market sentiment, likely due to Q3 2024’s macroeconomic uncertainty, rumours of the US government following Germany’s lead in selling seized Bitcoins, as well as rising geopolitical tensions.
- 56% of respondents said they expect to turn bullish within a year, with some likely already shifting from neutral to bullish after Bitcoin recently hit all-time highs.
- 71% expressed increased confidence in the asset class following the approval of the Bitcoin and Ether spot ETFs.
Institutional Barriers to Entry
Historically, traditional investors looking to invest in digital assets “were challenged by their strict fiduciary responsibilities and investment mandates, as well as limited access to properly regulated crypto asset custodians.”
However as regulatory clarity is perceived to be “on the rise (69%), asset volatility (43%) has become the biggest barrier to institutional crypto adoption.”
Concerns about security and custody remain high (39%).
81% said that better information would “lead them to invest more.”
This suggests that investors “may be turning their attention from regulatory matters to market specific risks, strategic planning and technology deep dives.”
Crypto Investment Preferences
The highest area of interest is “Layer-1 (76%), fueled by growth in Bitcoin, Solana and other scalable protocols.”
Web3 infrastructure has emerged as the “second most attractive crypto investment area (55%), propelled by the growth of Decentralised Physical Infrastructure (DePIN) and AI.”
DeFi has seen declining interest (33%), “possibly due to regulatory challenges, security concerns and the more than USD 2.1 billion lost to vulnerabilities and hacks in 2024.”
Although traditional yields outperformed DeFi during high interest rate periods, DeFi’s attraction for investors “may improve with changed market conditions.”
Direct token investments are the “most attractive” investment product (72%), followed by a rise in “demand for ETPs/ETFs (47%) following the US Bitcoin and Ether spot ETF launches.”
In the 2023 survey, real estate was the “most popular” tokenized asset of interest.
This has been overtaken by “equity (44%), corporate bonds (41%), and mutual funds (40%).”
Real estate has now dropped to seventh place, “potentially due to the inherent complexity and limited development of these assets to date.”
