Institutional Investments Expected to Grow over Next 5 Years?

Fidelity Digital Assets, a subsidiary of Fidelity Investments, has recently published an article that shows clear confidence about the early arrival of major institutional investors. Fidelity Investments manages assets worth an estimated 2.25 trillion euros, making it rank 5 of the world’s largest asset managers.

Institutional investors are showing interest

On May 2, 2019, the company published a study on how institutional investors are dealing with the topic. Of the 47% of crypto-currency interested, there were the following opinions:

72% would buy financial products that contain digital assets.
57% would buy cryptocurrencies directly.
57% would buy a financial product that represents a share of digital assets companies.

The survey inspected over 400 institutional investors such as pension funds, family offices, crypto and traditional hedge funds, financial advisers and foundations in the US. Tom Jessop, President of Fidelity Digital Assets said that:

We have seen an increasing interest in digital assets, from early risers such as crypto-hedge funds to traditional investors such as family offices or foundations. More institutional investors are dealing with digital assets, either directly or through service providers, as the potential impact of blockchain technology on the financial markets, old and young, is becoming increasingly apparent.

According to seven out of ten respondents, the properties of crypto breeders are attractive. 47% value technological progress. 46% praises the low correlation with other digital assets. Financial advisers (74%) and family offices (80%) particularly emphasize the properties of crypto-nutrients.

There is still a lot of work to do to classify this new asset class and estimate the risks. Especially the high volatility is a hurdle for many major investors. This could subside over time, giving investors a more familiar environment, Jessop said.

He also said that institutional investors would not be left with technical progress, Bitcoin and the other cryptocurrencies would not go unnoticed. They are increasingly looking at technical indicators such as transactions taking place on the blockchain etc. Fidelity Digital Assets expects the number of investors investing in cryptocurrency to rise sharply over the next 5 years. 22% of the respondents had already acquired cryptocurrencies.

The role of Fidelity Digital Assets

According to the survey, 18% use third parties to store cryptocurrencies. 13% keep cryptocurrencies to themselves and 6% use non-custody trading.

Fidelity Digital Assets offers the storage of assets for institutional investors. According to the company’s white paper, self-custody is difficult to achieve because of regulatory issues and regulations. Therefore, self-storage with hardware wallets is not a viable option for most of these investors.

FDA is working to make Bitcoin and other digital assets available to large investors and make their storage easy.

Investors are still pouring billions into the crypto space even though crypto prices tanked. Blockchain and crypto-related firms raised $3.9 billion as of October 2018 and many investors see its long term prospect and see the current bear market as something that will be soon over. Many investors are convinced that the worst is over and see crypto as a viable investment opportunity.

Disclaimer: This information should not be interpreted as an endorsement of any cryptocurrency. It is not a recommendation to trade. The crypto market is full of surprises and overhyped assets. Do your research before buying anything. Do not invest more than you can afford to lose.

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