More than sixty percent of cryptocurrency investors increased their allocations in the past year, according to a recent survey. Only 12% of cryptocurrency investors reduced their holdings in the bear market.
Despite bearish market sentiment, 62% of cryptocurrency investors increased their allocations in the past year, according to a Coinbase-sponsored study of institutional investors.
According to the survey, only 12% of cryptocurrency investors chose to reduce their holdings. The investigation includes the fallout from the Three Arrows Capital collapse that shocked the industry earlier this year. And now again, the FTX bankruptcy has disturbed other companies in the area.
Investors See a Weak Market as an Opportunity
This survey includes 140 US-based institutional investors who manage approximately $2.6 trillion in assets. In particular, institutional investors increased their holdings during the crypto winter.
Right now, many are reportedly seizing the opportunity to make long-term investments.
The survey results show that differential performance is the main reason investors want to invest in cryptocurrencies. In addition, many expressed a desire to pursue high-tech. This may be the reason why there has been an increase in cryptocurrency investments.
According to the report, 58% of investors anticipate increasing their allocations over the next three years. The majority of investors (59%) currently employ or intend to trade a buy-and-hold strategy.
Currently, the global cryptocurrency market capitalization was just under $860 billion. This is a major recession from the 2021 peak of over $2 trillion.
Bitcoin was hovering around $16,500, wiping out most of the market capitalization. However, the report highlights elevated volatility as a desirable opportunity for these institutional investors to produce additional or alpha gains.
Long-Term Crypto Predictions Remain Positive
The markets are currently experiencing “deeply negative sentiments,” according to the latest weekly report from CoinShares. Despite that, it reported inflows of $44 million for the week, with most of the investment coming from short-term investment products.
The survey reveals that people continue to have a favorable attitude towards digital assets, with 72% of respondents agreeing that they are here to stay.
Notably, 86% of these people have already invested in cryptocurrencies, and 64% plan to do so. However, institutional investors recognized regulatory compliance as a critical driver of future growth.
Regulations Will Be a Key Factor in Growth
Regulation is also expected to play a crucial role in the future of the industry, according to the Official Forum of Monetary and Financial Institutions, an independent think tank on economic and investment policy.
Starling Bank, located in the United Kingdom, recently tightened its regulations on cryptocurrency transfers and halted all incoming and outgoing payments from exchanges. Therefore, the new rules could make or break the digital asset class in the wake of cryptocurrency crashes.
Policy adviser and former head of the Federal Deposit Insurance Corporation Sheila Bair told the Financial Times that regulators should craft policy for the sector.
By Audy Castaneda