Despite the big price drop this year, many institutional investors are accepting cryptocurrency.
- Institutional-investor acceptance of cryptocurrencies has increased as more investors are beginning to see digital assets as good holdings, according to a Fidelity Investments survey.
- Cryptocurrency has not been widely accepted as the prices often fluctuate and some see security concerns within the digital holdings.
- Now, even as the prices have severely slumped this year, more institutions are jumping on the crypto bandwagon.
Why it’s news
Cryptocurrencies had a rough summer hitting major slumps and big sell-offs.
June especially was a brutal month for cryptocurrencies. Bitcoin dropped 37.3% in June alone, giving it the largest fall since 2011. The sell-off was triggered by inflation fears and investors trying to liquidate.
The major sell-off caused job cuts in many crypto companies and even forced some lenders to pause withdrawals. In July things started looking up as Bitcoin and other cryptocurrencies skyrocketed with a major comeback after the large tech-stock selloff.
Now, crypto seems to be back in investors’ good graces as more and more are seeing cryptocurrencies as worthwhile holdings.
Nearly 60% of institutional investors said they were invested in digital assets in the first half of the year, up six percentage points from last year, according to a Fidelity Investments survey. The survey also showed that four out of five investors think digital assets should be included in investment portfolios.
“While the markets have faced headwinds in recent months, we believe that digital assets fundamentals remain strong and that the institutionalization of the market over the past several years has positioned it to weather recent events,” says president of Fidelity Digital Assets Tom Jessop.
Others haven’t jumped on the crypto wagon yet. Some investors still voice concerns with crypto such as the big price jumps and security concerns.
Chris Kuiper, director of research for Fidelity Digital Assets, assures people that if they conduct research on cryptocurrencies they can learn the true asset the digital holdings could be.
“While short-term price fluctuation is a characteristic somewhat inherent to this emerging asset class, many of the other concerns cited by respondents can be addressed as institutional investors move through their journey of education,” says Kuiper.