Most professional investors can point to a formal education when it comes to their expertise in finance. This formal education, however, does not cover information about the Blockchain technology and Digital Assets. It is therefore of importance for institutions venturing into this new industry sector, to educate their employees first. For our report we asked them about their approach to Blockchain education and want to present this information here.
When asking about how financial intermediaries learn about blockchain, the highest ranked sources included encouraging employees to research the topic during working hours and an individual within the firm is spearheading the internal dialogue. Participation in conferences and webinars on crypto also promotes interest in the subject.
There is also a general openness to educational training concerning digital assets, but the survey participants generally do not rely on hiring external consultants or attending university courses in order to learn more.
Source: Cointelegraph Research
Digital Assets for me, but not for thee
Several of the case study respondents stated that they had privately invested in Bitcoin and other digital assets, while their institution had not yet made any direct investments. However, the majority of the respondents had a high level of decision-making ability within their firm.
A possible explanation for this can be that asset allocators are investing with more risk aversion when investing on the behalf of others than when investing their own wealth.
Source: Cointelegraph Research
The majority of the respondents had a master’s degree or above in formal education.
QUESTION: What level of education have you completed?
Source: Cointelegraph Research
Education about the Blockchain technology behind Digital Assets is not only important when it comes to choosing an asset to invest in, but also when it comes to safely handling this asset. These technological risks around purchasing and storing an asset can prevent an institution from investing into this new asset class. In the next article we will take a look at these risks to understand what companies fear the most.
It will surprise no one to hear that a growing number of institutional investors have already invested in cryptocurrencies with increased global awareness and crypto marketing. But which institutions are we talking about here? This is a crucial question when it comes to accurately classifying the scope of this statement, since the term “institutional investors” covers a very wide range of institutions.
Multiple types of professional investors responded to this survey including trusts/foundations, small asset managers (less than €100 million), medium asset managers (between €100 million and €1 billion), large asset manager (above €1 billion), insurance companies, pension funds, high-net-worth individuals, family offices, and banks. The majority of respondents are small asset managers and high-net-worth individuals, both of whom account for about 32% of the total respondents.
Smaller asset allocators, such as family offices and boutique wealth management companies, are more likely to invest in digital assets than larger financial service providers, such as banks and pension funds, according to the survey results. All 14 of the small asset allocators and family offices responded that they already own or plan to own digital assets in the future. This is compared to zero out of the two pension funds, one out of the three insurance firms, and two out of the six banks that were surveyed.
Many banks stated that they would like to offer their clients the ability to buy and sell digital assets; however, the decision that needs to be made by the C-Suite executives is whether to build up their internal infrastructure or outsource the trading and custody to a third-party broker or exchange.
Question: What type of investor is your company?
Source: Cointelegraph Research
Percentage of Each Investor Group that Owns or Plans to Own Digital Assets
Source: Cointelegraph Research
Using Existing Infrastructure or working with a Broker to Invest in Cryptocurrencies?
Source: Cointelegraph Research
For example, the Swiss giant in core banking systems, Avaloq, was mentioned multiple times by respondents. Avaloq is offering trading and custody solutions for investing in digital assets. If a bank buys the Avaloq digital asset module, the ability to invest in digital assets could be expanded to the bank’s entire customer base, and retail clients would even be able to buy and sell via their e-banking and mobile-banking applications.
However, the banks said they are hesitant to purchase software solutions to bring digital asset investing to their clients. The infrastructure and services are considered to be too expensive still. Custody solutions in particular are comparatively expensive. The main reason for this is believed to be a lack of competition. The banks would need to have significant demand for digital assets from their clients in order to justify the expense. As more traditional players enter the digital asset industry, prices should fall in this regard.
Information is of very great importance for investors in cryptocurrencies. Because of the highly speculative nature of this sector, weighing the risk is only sufficiently possible when a given project has been examined from all sides. This expertise is something that many institutions have yet to acquire. We will take a closer look at this process in the next article of this series.
Digital Assets are a new and very specific group of assets that is increasingly interesting to investors for many different reasons. What are these reasons and is there one specific reason that dominates our survey? This is a question, that we will look at in this article. Another question that may be interesting to other potential investors is the question of ‘How?’ the surveyed companies have decided to invest in digital assets. Because this class of assets is new, the ways of investing also differ from more traditional assets.
According to the survey results, the most important consideration for investing in digital assets is their risk-return ratio, as 53% of respondents rated this characteristic as “highly important”. Most of the responses to “diversification” and “my company is convinced that the technology will be important in the future” are clustered in the middle and slightly skewed to the right of the importance spectrum, meaning that these factors are moderately important. Notably, the survey shows that clients requesting digital assets is not very relevant to the asset managers’ decision to invest in these assets. As one respondent pointed out, clients requesting digital assets would be their number one reason for investing, but so far, none of their clients had requested digital asset exposure.
Source: Cointelegraph Research
Professional Investors prefer Direct Investment
The target group for blockchain-inspired financial products include pension funds, insurance companies, university endowments, high-net-worth individuals (HNWI), family offices, asset managers, banks, and fund of funds from around the world. Usually, these investors are asking for a regulated and easy-access approach to crypto exposure. Some of them want to invest in a new asset class with a great risk-return profile, others want diversification. There are many regulated investment products that give investors exposure to digital assets including long-only single asset or index products, derivative products, bank accounts for prop desk trading, and much more. This report found that professional investors prefer to invest directly in digital assets by buying them on an exchange. Interestingly, professional investors prefer to buy a regulated alternative investment fund before using a broker.
Question: What is your company’s ideal way to gain exposure to crypto assets?
Source: Cointelegraph Research
Digital Asset Service Providers
When asked about their use of specialized services for digital assets, respondents were most interested in data. 62% of respondents are interested in using data on digital assets at their company. Leading data providers in the digital asset industry include Coinmetrics (also sold by Messari), Coinmarketcap.com, and Cryptocompare. However, closer to home in Europe, Santiment and IntotheBlock also provide data on a monthly subscription basis. The next most sought after service is trading of digital assets on a digital asset exchange. In the German-speaking region, the only digital asset exchange owned locally is Bitpanda, which is headquartered in Austria. In Germany, Bitcoin.de is a peer-to-peer exchange, which is mostly used by retail investors.
However, there are several exchanges that serve Europe including Kraken, Binance, Bitfinex, Bitstamp, and Crypto.com. Over half of the respondents (54%) are interested in using an over-the-counter desk for the digital asset transactions. The largest OTC-desk operating in Europe is B2C2, based in London. Many brokers in the German-speaking countries offer over-the-counter services but use B2C2 or Cumberland for final execution. Notably, 48% are interested in using smart order routing software. Smart order routing software includes companies such as Blocksize Capital, based in Frankfurt, and CoinRoutes, based in the US.
Source: Cointelegraph Research
In this graphics we are looking at all investors that participated in our survey indiscriminately but this does not paint the whole picture. Behind every number there is a company of different size and investment volume. Next week we want to go deeper in the individual numbers and look at how much the size matters.
The Blockchain technology is fast gaining momentum in the digital world and so is the attractive job opportunities that comes with it. This technology is a decentralized digital network that makes it highly difficult for information or data to be altered or hacked on the system. Most cryptocurrencies use Blockchain technology to record transactions because of its transparency.
Crypto jobs are currently gaining popular demand in the digital world because of its peculiar skills set and also the lucrative salaries. Below are the Top 10 Blockchain Jobs in the World:
BLOCKCHAIN DEVELOPER
Currently one of the most popular Blockchain jobs, Blockchain developers basically develop applications using the Blockchain technology. To excel in this field as a developer, extensive knowledge of Python, C++, .NET, XML, etc. are important. Blockchain Developers earn an average of $91,000 per year because of its common demand.
BLOCKCHAIN ANALYST
A Blockchain Analyst is responsible for analysing the Blockchain app, as well as ensuring that all potential risks are detected concerning the application. A Blockchain Analyst is also responsible for the growth and marketing strategy of the app and must have high knowledge of the Blockchain technology. The basic salary is around $93,480/year.
BLOCKCHAIN ENGINEER
Blockchain Engineers specialize in creating and implementing digital solutions for organizations and companies using blockchain technology. For this career path, good experience in programming languages like Python and Java, with knowledge of cryptocurrencies are important. A Blockchain Engineer takes home roughly $70,000 per year.
BLOCKCHAIN UI/UX DESIGNER
This blockchain job demands creativity and a good eye for user friendly designs. A UI/UX Designer is responsible for creating an interface for the Blockchain app that is user friendly and easy to navigate. This job opportunity requires technicality and considerable knowledge of the Blockchain technology and pays an average of $107,000/year.
BLOCKCHAIN SOLUTION ARCHITECT
A Blockchain Architect helps to infuse blockchain in building and designing solutions by designing and connecting the various blockchain parts. This blockchain job opportunity requires cooperation with other team members and knowledge in React, CSS, HTML, React Python, Generic SQL, Node and also experience in DevOps, data science, and cryptography are highly important. Basic salary caps at $114,000/year.
BLOCKCHAIN ADMINISTRATOR
This career path is one of the most sought after in the Blockchain industry. A potential blockchain administrator should be fluent in the workings of Bitcoin protocol, including knowledge of programming languages and good usage of Linux/Unix. A blockchain administrator is in charge of coordinating the components of a blockchain infrastructure and takes homes around $67,000/year.
BLOCKCHAIN QUALITY ENGINEER
Ranking high amongst the blockchain jobs, a blockchain quality engineer ensures that all components of the blockchain application are of top quality by testing for bugs and glitches. Knowledge of the blockchain platform is essential with crypto exchange being a bonus. Average salary for this career opportunity hangs around $107,000-$120,000/year.
Other Blockchain jobs available in the Blockchain industry include PROJECT MANAGER (in charge of connecting the blockchain experts with the needs or goals of the company), LEGAL CONSULTANT (for the legal aspects of the Blockchain infrastructure) and BLOCKCHAIN CONSULTANT (for provision of technical knowledge and expertise as regards the blockchain platform)
These are the Top 10 Blockchain jobs currently and it is advisable to go with one that matches your skills and qualifications because the Blockchain industry is rapidly expanding.
Many people are buying Bitcoin and other cryptocurrency these days to protect their money from the ravages of an economy on its knees. Bitcoin is looking good as a safe harbor to wait out the volatility of the recession the world is undergoing right now.
And with the value of it rising to record heights, it seems like a good time to be buying in and making a profit in addition to keeping the money you have worked hard for from evaporating. With inflation poised to rear its ugly head, it is a very attractive proposition.
However, there is an issue of having your Bitcoin stolen from you if you aren’t careful. There are a lot of shady characters preying on people that don’t understand how cryptocurrency works. In this article, I will go over some common scams so you don’t fall for them yourself.
Fake exchanges
There are a lot of exchanges that are perfectly safe and are the easiest way to buy Bitcoin so you can trade with peace of mind. However, there are a number of shady exchanges that are not exchanges at all.
There are websites made to look as though they are an authentic exchange only to take your Bitcoin and disappear into the night. Once your Bitcojn are gone there is no getting them back.
Make sure to only use trusted exchanges to avoid this. Even aside from the scam ones, you should be looking into ones that have good encryption to keep your transactions safe from hackers.
Pump and dump
This scam is very widespread but may not exactly come under the exact definition of a scam since nobody is actually stealing your Bitcoin.
The process of doing a dump and pump is when a group of people buy up a coin when it is very cheap. Then they promote it as the next big thing all over social media and hope that it gets picked up by mainstream channels. The hype surrounding it will make people want to buy in before it hits its highest value. Then, once it has doubled, tripled or even more in value, they sell their coins off and then create a negative hype in which they crash the value of the coin.
Don’t trade using your emotions and always avoid FOMO (Fear Of Missing Out). Read as much as you can if something looks too good to be true.
Fake cryptocurrency
There are always new coins coming into existence that get investors eager to buy while the value is low. The problem here is that some new coins exist only on paper or they are actually on the blockchain but there is nothing supporting them.
Fake startups ask people to buy in the ICO and then instead of investing the money into building out the platform, they pocket the money and disappear. Be very diligent with new coins and always read the white paper carefully.
*This article has been contributed on behalf of Paxful. However, the information provided herein is not and is not intended to be, investment, financial, or other advice.
Bitcoin mining is the process of creating new bitcoins by solving a computational puzzle with computational power. Solving the mathematical algorithm is necessary to confirm a block (of transactions) which is how you are then rewarded with newly created bitcoin.
It is just like solving complex puzzles. Constant mining of Bitcoin is essential to maintain the blockchain ledger which records transactions of blockchain. It basically acts as a wallet to the Bitcoin or any cryptocurrencies you collect. With the increasing demand for Bitcoins in the modern era, the demand for higher efficient mining computer operations has also increased.
Mining Bitcoin is the process that produces a Bitcoin or token. It processes functions with computer software along with an enhanced configuration of the computer.
Mining cryptocurrencies is basically a race of people competing non-stop. Trading crypto comes with factors like buying the best, latest, and one of the most powerful hardware. This is just to maximize the return and increase the feasibility. Whether it is Bitcoin or any other crypto coin, the better the hardware. the higher the overall computational efficiency.
Pool mining forms when many miners come together. If you are not operating a mining farm with dozens if not hundreds of computing machines, but only have one or two, you would be better off joining a mining pool so that you can earn a more predictable return (your earnings are in proportion to the percentage of computing power your equipment is adding to the overall pool.)
Because bitcoin has so much overall computing (hashing) power, you are literally trying to earn money competing against millionaires who are spending as much to mine bitcoin. Also, the equipment you would need to earn a decent return on your costs would be upwards of USD $1000+ each.
How Does Bitcoin Mining Work?
Whenever you create a block, you get a block reward of 12.5 Bitcoins. The bitcoin is also mined through solving mathematical problems. These problems are called hash puzzles. To mine a bitcoin, either you need a GPU (graphics processing units) or an ASIC (application-specific integrated circuit) to process the mining process. And in case, any bitcoin user uses the same bitcoin twice, its called “Double Spending” which is ethically wrong to do.
Storing the mined Bitcoins
The tradition of storing Bitcoins has evolved largely since the time it first came into existence. There are two ways to store bitcoins.
Cold storage is a system where you store the bitcoin address offline or without the need of the internet.
This method is referred to be the safest among all as it is virtually impossible to hack and can be stolen only physically.
Example: Paper wallet, hardware wallet.
Hot storage is a system where the wallets will require access to the internet to run.
Hot storage is used widely all over the globe as it’s proven to be the slickest method. But it has got its loopholes too like security vulnerability, network issues, viruses.
Cloud mining
Humanity always finds a way to upgrade the way things perform. Similarly, Cloud mining is a similar example of that upgrade. In cloud mining, the need to install hardware or any mining-related software is directly eliminated. The cloud is rented by the miner which uses computing power and cuts down hassle through the entire traditional process.
Cloud mining is extensively suggested by many in the industry. There are companies with huge mining farms and you can rent computing power from them. This is wise as like others said mining on your own equipment is not profitable anymore compared to cloud mining.
Cloud miners typically use the computer of a company that owns a bitcoin mining hardware and runs it on a large scale. You pay the company rent for some part of the hardware. Based on the amount of hash power you pay for, you will earn a share of payments from the cloud mining company for any revenue generated by the hash power you purchased. Most cloud mining companies make more profits from renting out hardware or mining on behalf of an individual.
For avid traders, mining is the best and easiest way to earn bitcoins. It is easy and interesting because anyone can do it at home or anywhere you like.
However, Bitcoin mining is not free. You have to be sophisticated well enough to reap more than you sow. For hasty miners, crypto-mining is increasingly less profitable and brings more expenses and inconvenience than digital money because of its excessive electricity consumption and excessive cost to mine.
The risk involved in Cloud Mining
Many do not find risking money and energy on mining as a friendly scenario. They save up their money and buy Bitcoin when they hit their lowest.
Almost all cloud mining operations use investor’s money to pay previous investors. If you want to mine bitcoin, buy your own equipment and run it yourself or send it to a hosting company. A key indicator to tell if a cloud mining operation is legitimate: Can you direct your mining power to a pool of your choice, where you can see the mining happen and receive bitcoins directly? If you only receive bitcoins from the cloud mining operation, chances are there is no actual mining going on.
It’s very difficult to know which websites for cloud mining are legit or not and who knows they could shut down their website. We would suggest you buy bitcoin, or any other crypto you are interested in, through an exchange or bitcoin selling websites like Coinbase, Paxful or Localbitcoins, and keep them safe in your wallet till their prices go up. And if you really want to mine, you can find a miner to do it for you after extensive research.
What about mined Bitcoins?
Growth of Bitcoins cannot be stopped. As long as people have transactions, Bitcoin will continue to grow. When a large number of bitcoins will be mined, it will impact the market by cutting bitcoin’s value to halve every four years. However, it will take a century or more for such a day to occur. So you can now mine bitcoin without worrying about its future value.
What are digital assets? Digital assets, or cryptographic assets, are tradable and digital representations of value that rely on decentralized consensus mechanisms for settlement.
According to the Basel Committee on Banking Supervision, the three distinguishing factors of cryptocurrencies are their digital nature; their use of cryptographic primitives, such as hash functions to verify the integrity of the data and symmetric encryption to create public and private keys; and decentralized record keeping and decision making.
Although there are over 7,000 cryptocurrencies listed on Coinmarketcap.com, not all of them serve the same purpose. Some are volatile digital currencies, such as Bitcoin, others are stablecoins that are pegged to the dollar, such as Tether. Generally, crypto assets fall into three categories including fungible digital currency, non-fungible tokens, and security tokens. Cryptocurrencies, stablecoins, and Central Bank Digital Currencies (CBDCs) are all forms of digital currency. Digital currency can also include online bank deposits issued to customers by banks, such as UBS or Deutsche Bank. The possession of digital currency often creates a legal claim against the electronic money issuer. However, this is not often the case with cryptocurrencies. In addition to fungible digital currency, non-fungible tokens can be used to represent unique assets, such as the Mona Lisa painting. Finally, security tokens often represent investment contracts, and they are regulated by securities laws.
Source: Cointelegraph Research
In addition to stablecoins pegged to fiat currencies, another class of tokens is gaining traction, whereby each token represents a commodity. For example, CACHE is a provider of regulated, transparent and redeemable tokens backed by gold stored in accredited vaults around the world. CACHE uses GramChain, a revolutionary new Proof of Reserve system, that enables the public to view photographs and see real-time status updates for each bar in each vault. CACHE provides fast, flexible redemption at scale with the option to sell the underlying gold for fiat currency. Based in Singapore, CACHE’s partners include vaults and gold dealers such as Brink’s, Dillon Gage, Loomis, Silver Bullion, and The Safe House as well as custody provider Onchain Custodian and digital asset exchange Bithumb Global.
The CACHE team draws on decades of experience in the precious metals and vaulting industry as well as legal, compliance, blockchain and cryptocurrency expertise. Each CACHE Gold token is backed by one gram of pure, investment-grade physical gold. CACHE Gold tokens can be redeemed for physical gold at any time. In amounts as small as 100 grams, redeemed gold can be sold for US dollars, shipped to the token holder’s address or collected in person at select vaults. Token holders have full control over their assets. No centralized third party can freeze or confiscate tokens. CACHE Gold tokens are deployed on the Ethereum public blockchain using the ERC-20 token standard. Bithumb Global and Bittrex Global both enable CACHE Gold token trading.
As these examples show, so-called “digital assets” are a very complex type of investment which, contrary to widespread public perception, cannot easily be reduced to a common denominator. The same also is true for the investors, because they are having different approaches and expectations of this new market. These aspects were also covered in our report, and next week we will make the findings available to our readers here on this blog.
Throughout Europe digital assets enjoy a great popularity among investors. Due to the significant price changes of individual assets in recent years, however, the timing of investments is an important factor in assessing the success of the individual investors. This article therefore aims at finding out when the investors we surveyed first started to invest in digital assets and which ones they primarily focused on.
The majority of investors gained exposure to digital assets for the first time during the past two years. Nearly 31% of those surveyed invested in crypto assets in 2018 — after Bitcoin’s all-time high in mid-December 2017, when the price was almost $20,000 per coin and Bitcoin had a $334 billion market capitalization.
Question: What was the first year your company invested in digital assets?
Source: Cointelegraph Research, Bitcoin average yearly price data from Coinmarketcap.com
An important observation is that institutional investors that have invested in digital assets have distinctly different portfolios compared to ones that have no exposure to this asset class. Digital asset investors have significantly fewer bonds, more commodities, and more cash reserves than investors with no exposure to digital assets. This is in line with the ethos of the industry — lower trust in government bonds, higher trust in sound money, and growing cash reserves in expectation of a recession.
Average Asset Allocation of Institutional Investors
Source: Cointelegraph Research
Cryptocurrencies are more interesting than Stablecoins and Security Tokens
Bitcoin and Ethereum are still the most dominant cryptocurrencies. Around 88% and 75% of respondents exposed to cryptocurrencies have invested in these cryptocurrencies, respectively. Respondents have a clear preference for Bitcoin and Ethereum, as only 31% have invested in Litecoin and XRP. A quarter of the respondents answered that they had invested in “other cryptocurrencies”. Tezos, EOS, Stellar, Binance Coin, Cardano, Bitcoin Cash, and Bitcoin Satoshi’s Vision were among some of the other cryptocurrencies mentioned.
Question: Which types of digital assets has your company invested in?
Source: Cointelegraph Research
Stablecoins have become the most highly traded digital asset when measured by daily exchange-traded volume. On-chain trading activity grew over 800% between April 2019 to April 2020. However, only 19% of respondents own stablecoins, indicating that institutional investors may not be the dominant force responsible for stablecoin daily trading volumes. Notably, 31% of investors that have exposure to digital assets answered that they have invested in security tokens. This indicates that security tokens are on the radar of professional and qualified investors. Although venture capital was not a multiple choice option, two banks that manage over €350 billion in total mentioned that although the financial institution they work for has not invested directly in digital assets, they have invested in the equity of blockchain-related startups.
The European Union rolled out negative interest rates in 2014, and Switzerland has had them since January 2015. As Fidelity’s report on institutional demand from earlier this year pointed out, a common objection against investing in gold and Bitcoin is that they don’t produce an annual yield. However, in the current environment, these assets can help investors protect their wealth from inflation and negative interest rates.
Future Demand
Among the 64% of investors who currently do not have cryptocurrencies in their investment portfolios, 39% plan to add them to their portfolio eventually. A quarter of the professional investors plan to buy cryptocurrencies at a later stage, and 14% of them plan to do so in the next 12 months.
Question: Is your company planning to invest in the future?
Source: Cointelegraph Research
Regarding the future demand for cryptocurrencies among professional investors, Bitcoin and security tokens are the assets in which investors are most interested. Surprisingly, there is more interest in security tokens and stablecoins amongst institutional investors than in cryptocurrencies such as Ethereum and XRP. This may be explained by the regulated nature of security tokens, as investors’ assets are often ring-fenced on the balance sheet of the issuer and rights in case of insolvency are explicitly mentioned in the prospectus. Furthermore, disputes can be settled by courts and contract law that the digital asset space is still building precedent for.
Question: Which digital assets would your company be interested in investing into in the future?
Source: Cointelegraph Research
After we have now dealt with these specific figures, we want to take a step back in the coming week, because some people will certainly ask themselves the question what exactly is meant by digital assets. The page Coinmarketcap.com lists more than 7000 different “cryptocurrencies”, however the differences between the entries could not be more substantial, which is the reason why we need a clarification.
Throughout Europe, investors have already invested millions of Euros and Swiss Francs into digital assets. Without a doubt, this is of significant importance for the economy in general and the crypto sector in particular, since these investors also play a major role in price movements. However, there are still only a small number of reports that systematically assess the demand for cryptocurrencies.
The first study was not focused on the German-speaking countries, and the second has not been published yet. Between November 2019 and early March 2020, Greenwich Associates under the auspices of Fidelity Digital Assets, Fidelity Center for Applied Technology, and Fidelity Consulting interviewed almost 800 investors across the U.S. and Europe.
Across the U.S. and Europe, 36% of the survey’s 774 respondents said they own cryptocurrencies or derivatives. The results show that over a third of institutional investors own digital assets. According to the survey, European investors generally have a more progressive view of digital assets, made evident when comparing the responses across all categories. Interestingly, this study found the same result: 36% of the survey’s 55 asset allocators said they have exposure to cryptocurrencies in the portfolio already.
The one survey that has targeted institutional demand for cryptocurrencies in the DACH region is BaFin’s survey of crypto asset derivatives. The German financial market regulator conducted a survey in late 2019; however, they have not published the results yet. In the survey’s preliminary research report, BaFin reported that there has been enormous growth of certificates that hold digital assets and contract for difference trading. Over 1,000 different certificates are on the market that have exposure to digital assets, and contracts for difference trading volume grew from €10 billion a month in August of 2018 to over €15 billion a month by January of 2019.
This study marks the first comprehensive survey of institutional investors on the topic of digital assets ever conducted across the German-speaking regions. The analysis contains key highlights of the survey’s results in addition to commentary from Crypto Research Report and Cointelegraph Research. Our experience combined with the proprietary dataset drives the unique perspective on the industry’s trends presented in this report.
Methodology
This survey had 55 responses from professional investors across the German-speaking countries including 44 online interviews and 11 case studies via telephone. Respondents included traditional banks, asset managers, and pension funds. This report focuses on buy-side, not sell-side asset allocators. Therefore, we did not send this survey to crypto funds that are invested 100% in digital assets. The goal of this report is to gauge the demand for digital assets from traditional financial intermediaries.
The survey was delivered via email to all registered professional investors with BaFin (Germany), FMA (Austria), FINMA (Switzerland), and the FMA (Liechtenstein) between the months of June to September of 2020. With the help of local banking associations, the survey was also sent out to the members of the BVI Deutscher Fondsverband and BAI in Germany, the Austrian Bankenverband, the Liechtensteinischer Anlagefondsverband, and members of SFAMA in Switzerland.
The majority of the respondents came from Switzerland (16) followed by Austria (10), Germany (7), and Liechtenstein (6). When sorting the survey results by country, the respondents from Switzerland managed the most assets with €278 billion. Austria’s respondents worked in firms with the highest headcount. The majority (83%) of the respondents worked in firms with less than 50 employees. Only three women that were in charge of asset allocation decisions at their company responded to the survey compared to 39 men. The median age of the respondent was 47.5 years old.
Current Exposure
Over a third of the surveyed asset managers have invested in digital assets, while about 64% of respondents have not invested yet. Among the institutional investors who have had exposure to digital assets, approximately 69% of respondents have 10% or less of their assets under management in crypto assets. Notably, over a third of those surveyed have only 1% or less of their assets under management in crypto assets.
Question: Has your company invested in crypto assets in the past?
Source: Cointelegraph Research
This survey was conducted during the 2020 shutdown of the economy due to the government’s response to the Corona virus. During mid-March, many investors de-risked their portfolios and went into cash. From peak (February 19, 2020) to trough (March 17, 2020) Bitcoin lost 50% of its value, and briefly trading in the high 4000s. Since then, the price has recovered 115% to above $10,000. Bitcoin has performed better than equities, fixed income, real estate, and gold year to date (as of October 8, 2020). If governments continue to stimulate the economy with newly created money, then this trajectory is expected to continue. If the fiat faucet is ever turned off, there will likely be an ensuing correction in all asset classes.
Question: What percentage of your company’s assets under management are invested in crypto assets?
It is important to note that these figures apply to digital assets in general, but that there is a variety of these assets that are viewed by investors from different angles. Therefore, we will take a look next week at exactly how the interest is composed and what the conditions are for investors to make their purchases.
New survey on professional investors in Europe finds that 36% have already bought crypto. The percentage of big investors that plan to buy crypto in the future is even higher.
To gain a deeper understanding of how professional investors feel about digital assets, the Crypto Research Report and Cointelegraph Consulting has co-published a 70+ page research report written by eight authors and supported by SIX Digital Exchange, BlockFi, Bitmain, Blocksize Capital, and Nexo. TheDiscovering Institutional Demand for Digital Assets report highlights which coins wealthy investors already own and which ones they plan to buy in the coming months. The report also covers the most popular regulated funds and structured products that are designed for investors from the traditional finance realm.
The total assets under management managed by the 55 asset allocators that participated in the survey was over €719 billion, which almost double the entire market capitalization of the digital asset market. Out of those professional investors, 36% already had blockchain-inspired assets in their portfolio either through direct investment in cryptocurrencies, stablecoins, and security tokens or via funds, structured products, or futures. Out of the remaining 64% that have not yet invested, 39.29% plan to invest. This results in 61.15% of professional investors in the survey either already owning digital assets or planning to buy in the future.
The majority of investors with exposure to cryptographic assets were primarily interested in Bitcoin and Ethereum. Around 88% and 75% of respondents exposed to cryptocurrencies have invested in these cryptocurrencies, respectively. However, institutional investors appear to be increasingly interested in security tokens. Out of the 39.29% of investors that plan to invest in the future, security tokens were more popular than Ethereum and other alternative coins.
Some investors hold cryptographic assets for speculation rather than for use as a medium of exchange. They hope to “front-run” Wall Street by buying in before bigger pockets enter the market. Putting the fear of missing out aside, there are genuine reasons to be excited about institutional investors joining the space. Institutional investors hold the majority of the world’s wealth. The sheer size of the wealth managed by professional investors like pension funds, university endowments, and insurance companies is enough to have a dramatic impact on the entire digital asset industry if they enter the market. For years, there have been rumors that institutional investors were starting to buy cryptocurrencies, and now, the most recent academic survey provides evidence that this rumour is true.
The survey was conducted during June through September 2020 by Professor Dr. Philipp Sandner from the Frankfurt School of Finance & Management’s Blockchain Center, Professor Dr. Alfred Taudes from the Vienna University of Economics and Business’ Austrian Blockchain Center, and Cointelegraph’s Director of Research, Demelza Hays. The report is co-published by Cointelegraph Consulting and Crypto Research Report.
Our team of academics and seasoned blockchain technologists can cover a diverse range of topics including tokenomics, macroeconomics, legal, tax, central bank digital currencies, decentralized finance, supply chain logistics, and venture capital. To work with the Crypto Research Report and Cointelegraph Research team on creating a one-of-a-kind report, contact us at [email protected].
