Majority of Investors Expected to Increase Crypto Allocations in the Next 3 Years

Despite challenging financial conditions and an enduring bear market, there has been a noticeable increase in institutional adoption of cryptocurrencies. Many investors have remained strong and hopeful about the future role of cryptocurrencies in financial transactions.

Institutional Crypto Adoption on the Rise

A recent survey conducted by Coinbase, a top U.S. crypto exchange, revealed that 64% of institutional investors currently investing in crypto plan to increase their digital asset allocations over the next three years. Additionally, none of the respondents expect their allocations to decrease in that same timeframe.

The survey, conducted from October 19 to November 6, 2023, gathered insights from 250 decision-makers across different sectors including hedge funds, venture capital firms, pensions, foundations and endowments, family offices, sovereign wealth funds, and asset management firms in the U.S. These institutions were asked about their current crypto investments, evaluations of potential investments, and past investments in the sector.

In the past year, 33% of respondents increased their crypto allocations, 17% decreased theirs, and 50% remained unchanged. Furthermore, about 45% of institutions not currently invested in crypto are considering entering the sector within the next three years.

Blockchain to Replace Conventional Systems

The survey found that 73% of investors see blockchain as a faster and more secure payment method than the traditional banking system, and about 66% believe that blockchain will ultimately replace conventional trade-settlement systems. Additionally, the absence of clear crypto regulations in the U.S. was identified by 76% of surveyees as a hindrance to the country’s positioning as a leader in financial services, highlighting the need for regulatory clarity.

It’s also worth noting that crypto ranked third among the 15 asset classes evaluated for their abilities to generate attractive risk-adjusted returns in the next three years, following private equity and U.S. equities.