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Most Institutional Investors Have Concerns About Bitcoin, survey finds

CryptoWhale
CryptoWhale
A recent survey that included dozens of institutional investors and wealth managers from the US, UK, France, Germany, and the UAE who collectively have $275 Billion in assets under management, found that over 76% of them have deep concerns about the security, and liquidity of Bitcoin, and see many regulatory hurdles ahead.
The survey was completed in May-June 2021 and ran by Nickel Digital Asset Management, a London-based FCA-authorised, and regulated investment manager that specializes in a range of digital asset strategies.
According to the survey, here are the most significant hurdles preventing institutional investors from investing in Bitcoin for the first time:
  • Quality of custodial services 76%
  • Size of market/liquidity 76%
  • Regulatory environment 71%
  • Lack of transparency 69%
  • Volatility 65%
  • Lack of reputable fund managers offering investments in this area 64%
Anatoly Crachilov, co-founder and CEO of Nickel Digital, said:
“Whilst many forward-looking institutional investors are increasing their exposure to digital assets, our findings show that concerns around security and custody of these assets remain a top concern for many other allocators.
In reality, the industry has achieved very strong progress on that front, deploying a range of sophisticated cryptographic solutions, including distributed keys and MPC (multi-party computation) vaults, to create robust custody models.
In addition to crypto-native custodians, we are now seeing Fidelity, BNY Mellon, and State Street entering the market, thus further reinforcing market infrastructure. All of this increases the confidence levels in the sector and lead to ever-growing allocations to this fast-developing asset class.”
Henry Howell, Nickel’s head of business development added:
“Security of clients’ assets is paramount at Nickel. We deploy independent institutional-grade custody solutions, in partnership with US-based Fidelity and UK-based Copper.
These sophisticated solutions are based on air-gapped, multi-signature, cross-organization custody models, thus mitigating single points of failure, typically associated with self-custody of crypto assets.
In our setup, the join control over assets is retained by independent Fund Administrator and Fund Custodian at all times.”
Institutional Demand Hoax
While most companies are aware of Bitcoin, and other cryptocurrencies, this doesn’t mean they have any desire to acquire some at current prices. While there are clearly many utility-based cryptocurrencies that may thrive in the long run, the market is still clearly oversaturated, and will see a “cleanse”.
If we look at the data, only a handful of public companies in the entire world have even put Bitcoin on their balance sheet, most of which only invested a tiny fraction (1% BTC, and 99% cash) — for publicity?
Despite many Bitcoiners claiming Institutional demand is surging, and that Walmart, Apple, Facebook, and others are buying (fake rumors), On-chain metrics show that Institutional demand has significantly declined this year.
The Purpose ETF, one of the first approved bitcoin exchange-traded products, has also seen a massive slow-down in net inflows. The week closed with the largest net outflow of -90.76 BTC since mid-May.
Coalition Greenwich Survey — Bullish Long Term
While it’s clear institutional investors aren’t planning on purchasing Bitcoin right now, this doesn’t mean they won’t buy other crypto-assets in the future.
In another survey conducted by Coalition Greenwich on behalf of Fidelity Digital Assets found from 1,100 institutional investors, around 90% of them were interested in potentially investing in digital assets in the future.
Institutional Investors Waiting for Regulations
In the current market, cryptocurrencies still remain very speculative, and risky for investors. As we know, MicroStrategy’s big Bitcoin bet went from “amazing” to erasing 93% of unrealized profits in a few short months.
With that quick volatility, many big companies don’t feel comfortable investing in this market. Dozens of top regulators have also hinted at incoming crypto and stable coin regulations, which are expected in 2021–2022.
After regulations are introduced, and fraudulent entities are cracked down upon, I believe more large-scale companies will dip their toes in the market, which could be an amazing opportunity in the long run.
Would love to hear your thoughts! Do you think institutional demand for Bitcoin will return in the future or are the hurdles too large to overcome?
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