Institutions Ready to Enter? Fidelity Research: Nearly 80% of US and European Institutional Investors Bullish on Digital Assets

Although Goldman Sachs criticized Bitcoin heavily during an investor conference call at the end of May, stating that Bitcoin is not an asset class and lacks scarcity, a recent survey conducted by Fidelity Investments found that many institutional investors are deeply interested in digital assets and have already entered the crypto market.

Fidelity Digital Assets released a new report based on the survey, which was jointly conducted with the financial services consulting firm Greenwich Associates. The survey interviewed nearly 774 institutional investors in the United States and Europe, including pension funds, endowments, family offices, financial advisors, and hedge funds.

Institutional Investors' Interest Increasing Year by Year

This survey was conducted from November last year to early March this year before the outbreak of the COVID-19 pandemic. The key data points are as follows:

• 91% are willing to allocate 0.5% of their investment to digital assets
• 80% of institutional investors are very interested in digital assets
• 60% believe they will invest in digital assets in the future
• 36% (27% in the U.S., 45% in Europe) have already indirectly or directly invested in the crypto market
• 25% hold Bitcoin and consider it their preferred digital asset
• 11% have held Ethereum before

Regarding the proportion of U.S. investors involved in digital assets, it has increased from 22% last year to 27%; users who invest in cash or physically settled futures contracts have grown from 9% last year to the current 22%.

Reasons why U.S. and European institutional investors are interested in digital assets include: negative correlation with other asset classes (36%), potential for significant appreciation due to innovative technology (34%), and Europe investors seem more committed to digital assets with 25% believing that digital assets are attractive because they are not subject to government intervention, a view that is only shared by about 10% of U.S. investors.

The Influence of Legendary Investor Paul Jones

The head of Fidelity Digital Assets, Tom Jessop, pointed out that this survey came earlier than the letter released to investors by famous hedge fund investor Paul Tudor Jones, stating:

Paul Jones outlined the argument for investing in Bitcoin as a hedge against currency inflation in his letter to investors, confirming the thoughts of many macro investors. We see a trend in the market, where the general public is slowly accepting digital currencies as an asset class, reaching users from crypto hedge funds to pension funds, which may lead to an increasing percentage of mainstream financial institutions holding crypto assets.

Previously, Paul Jones announced his investment in Bitcoin and analyzed the reasons for his optimism in a letter to investors in May, causing excitement in the crypto community and astonishment in the traditional financial sector. In the letter, Jones mentioned Bitcoin 47 times and compared it to gold in the 1970s, entering a bull market.

However, Fidelity Investments also mentioned that many financial institutions remain unmoved by digital assets, with reasons for adoption barriers including excessive price volatility (53%), market manipulation (47%), and lack of fundamentals (45%), among others.