Bitcoin has been tapped as the cryptocurrency with the most compelling growth outlook in a CoinShares poll of prominent asset managers—but Ether continues to hold the largest position in their portfolios.
A total of 51 investors who collectively have $900 billion in assets under management took part in the quarterly survey, with 43% declaring that BTC’s upside potential is superior to ETH.
But the U.S. Securities and Exchange Commission’s aggressive stance against this still-nascent sector is still weighing heavily on family offices, institutions, and wealth managers—with growing concerns that tighter regulation, and even an outright ban, pose key risks to crypto in the future.
The news wasn’t all bad. Despite the spectacular implosions seen at FTX and Three Arrows Capital, reputational damage is no longer seen as a stumbling block for institutional investors looking to gain exposure to digital assets. A banking crisis and an appetite to diversify are the catalysts here—but there’s little doubt that public enthusiasm from the world’s largest asset manager has had a dramatic impact on sentiment.
CoinShares’ figures suggest there’s been a substantial contraction in the weighting given to digital assets within portfolios—shrinking from 1.8% in April to 0.7% by the end of June. And to make matters worse, $400 million of outflows were recorded in the first half of 2023.
But BlackRock—which filed an application to launch a spot Bitcoin exchange-traded fund back in June—may have been the catalyst that stopped investor sentiment from being rattled further. Why? Because it took just three weeks for $470 million worth of funds to flow back into the market—the surest sign that cryptocurrencies haven’t been discounted by institutions.
There are even hints that asset managers are willing to dip their toes into the ever-volatile world of altcoins again, with 10% dabbling in cryptocurrencies boasting a smaller market cap. Polkadot and Cardano have been the big winners in the most recent CoinShares survey—as well as XRP, which has been undoubtedly buoyed by a judge’s ruling that secondary sales don’t amount to a security. The verdict was enough to encourage Coinbase to relist the token.
But headaches remain. Custody concerns and accessibility have both surged as reasons why institutional investors are reluctant to make an allocation to digital assets—indicating some “aren’t comfortable with the existing methods for gaining exposure.”
And given how 70% of respondents came from Europe and the Middle East, with about 25% from North America and roughly 5% from Asia, the survey may not be an accurate reflection of sentiment within the U.S. right now.