Around two out of three professional investors will increase investment or invest for the first time over the next six months and 84% rate the sector as attractive over five years. The key reason driving increased investment over the next six months are expectations of improved regulation in the sector.
Professional investors are increasingly confident on investment opportunities in the crypto and digital asset sector over the short and long term despite recent market weakness, according to new research (1) by London-based Nickel Digital Asset Management (Nickel), Europe’s leading regulated and award-winning digital assets hedge fund founded by Bankers Trust, Goldman Sachs and JPMorgan alumni.
Nickel commissioned research with 200 institutional investors and wealth managers from across seven countries who collectively manage around $2.85 trillion in assets and found they are planning to increase investment over the next six months and rate investment opportunities in the sector as attractive on a five-year view.
Its study found 66% plan to increase or start investment in crypto and digital assets over the next six months including 12% who say their organisation will dramatically increase investment and 3% who say they will invest for the first time.
Their outlook is even more positive when taking a five-year view of the sector – 38% say the current investment opportunities in the sector are very attractive while 46% say they are quite attractive. Just 17% say the sector is unattractive on a five-year view.
The key reasons driving increased investment over the next six months are expectations of improved regulation in the sector and a recovery in valuations. Around 64% expect dramatic improvements in the regulatory environment while 63% predict a bounce in pricing.
There are signs of broader support for the sector in the study with 57% of professional investors saying their organisation’s appetite for alternative assets is increasing while 43% believe valuations are attractive on a medium to long-term view.
Optimism about the sector comes after a long decline in valuations and a series of high-profile shocks such as the collapse of FTX which have knocked confidence. Nearly six out of 10 (57%) questioned said their organisation had cut investment or sold all of their crypto holdings over the last six months. Around one in 12 (8%) said they had exited the digital assets sector.
However, nearly two-fifths (38%) saw the past six months as a buying opportunity with 12% saying they had dramatically increased investment in the sector despite the sell-off.
Anatoly Crachilov, CEO and Founding Partner at Nickel Digital, said: “It will come as no surprise that the sector has taken a reputational hit over the last year but it is great to see investor’s belief on the fundamentals of the sector has not changed due to the failure of a select few centralized entities. This is especially evident from investors’ long-term views which show the sector is here to stay and no longer on the fringe of the investment world.”
(1) – Nickel Digital commissioned the market research company Pureprofile to interview 200 institutional investors and wealth managers across the US, UK, Germany, Singapore, Switzerland, UAE and Brazil in January 2023.
Nickel Digital Asset Management (www.nickel.digital) is a London-based FCA-authorised and CFTC-registered investment manager that offers a range of digital asset strategy solutions for institutional investors. Its mission is to provide a gateway for traditional investors into the digital assets market across a broad range of risk profiles.
The firm pursues a range of systematic strategies dedicated to the digital assets market, with flagship offering of market-neutral arbitrage and multi-strategy non-directional funds, focusing on alpha generation.
Nickel is led by a senior team of traders and investment professionals of experience gained in major Wall Street banks, such as Bankers Trust, Goldman Sachs, JPMorgan, Morgan Stanley, BofA Merrill Lynch, Rothschild, and Credit Suisse, as well as global hedge funds, including DE Shaw and Cheyne Capital
Risk management is the core of Nickel’s approach to investment management. This was evidenced in March 2020, May 2021 when Nickel preserved the value of investor capital and delivered positive return at the time of market implosion. Nickel was named by Opalesque, the hedge fund advisory firm, as being amongst the top 2% of global asset managers “who delivered during the meltdown”.
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