Sygnum survey: 57% of banks plan to increase investments in cryptocurrency

What’s new? According to a survey by crypto bank Sygnum, 57% of institutions plan to increase their capital allocation in cryptocurrencies, reflecting growing institutional confidence in the new asset class. The annual survey polled more than 400 institutional and professional investors from 27 countries with an average experience of more than 10 years.

CoinDesk’s material

What else is known? 65% of respondents expressed confidence in the growth of the crypto market in the long term, and 63% plan to increase investments in digital assets in the next three to six months.

In seven days, the bitcoin exchange rate rose more than 20% and climbed above $93 000, helped by the re-election of Donald Trump as US president and traders’ confidence that the new administration will bring clarity to the regulation of the industry. Notably, 69% of respondents already noted the emergence of clearer rules for dealing with digital assets.

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In January 2024, shares of spot bitcoin exchange-traded funds (ETFs) from a number of leading investment firms, including BlackRock and Fidelity, began trading on US stock exchanges. These products have already attracted tens of billions of dollars from investors.

Over 70% of Sygnum survey participants said that the launch of bitcoin ETFs has increased their confidence in this asset class. Nearly 30% of respondents said digital assets outperformed traditional investments.

Earlier, analysts at QCP Capital said that bitcoin is gaining popularity as an alternative to gold as an inflation hedge, and reallocating just 1% of capital from the precious metal to BTC would cause the latter to rise to $97 000.

As for the Sygnum survey, more than half of respondents keep more than 10% of their funds in cryptocurrency, 46% plan to increase their investments in the next six months, and 36% are waiting for optimal conditions to enter the market.

For 44% of respondents, the strategy of buying and storing only one cryptocurrency was preferred, while 40% prefer to diversify their basket of crypto assets.

Layer 1 (L1) blockchains continue to attract the most interest, followed by infrastructure Web3 projects, and decentralized finance (DeFi) protocols. The tokenization of stocks, corporate bonds, mutual funds, and other real-world assets (RWAs) is currently more popular than real estate, which topped the list in 2023.

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Among the main barriers to entry into crypto investments, respondents cited strict fiduciary obligations and limited access to regulated custodians.

Representatives of financial institutions named the volatility of cryptocurrencies as the main risks, as well as problems with ensuring safe custody.

81% of respondents are convinced that access to quality and complete information about projects would encourage them to increase their investments in cryptocurrencies. Thus, regulatory issues are not currently the main concerns of current and potential investors, Sygnum emphasizes.

Market participants pay more attention to project-specific risks, strategic planning, and in-depth study of technologies.

Number of institutional bitcoin investors has risen to a four-year high

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Earlier, a survey by the US Federal Deposit Insurance Corporation (FDIC) showed that cryptocurrency was more likely to be used by households without full access to banking services in 2023.