Investing in cryptocurrency has become a rather straightforward process in 2020. Numerous startups provide this service, attracting a lot of attention. It is expected that institutional investors will increase their exposure to crypto assets in the coming months.
More Exposure to Crypto Assets
Even though there is no real correlation to Bitcoin and the stock market, both industries can share the same group of investors. Catering to institutional investors has proven challenging, even under the best of circumstances. If research by Evertas is to be believed, a significant shift will occur in the near future.
In their report, the firm claims 26% of respondents will dramatically increase their exposure to crypto assets in the years to come. Although this will happen in the next five years, it can have immediate bullish consequences. Given the recent market dip, a lot of assets can be picked up for much cheaper prices than normal.
Those actively seeking exposure include pension funds and insurers. A remarkable group, considering the volatility of Bitcoin and other similar assets. Wild price fluctuations don’t make for a strategic investment. At the same time, volatility can yield significant profits, which is always worth exploring.
Moreover, another 64% expects a slight rise in their exposure to crypto assets. It is an expected statistic, given the current market conditions. Hedge funds, on the other hand, will see a “major shift in allocation”. Predicting this impact on the market is impossible, though.
Growing Industry Attracts Attention
Many people have dismissed Bitcoin as a fad over the years, Considering how BTC has been around for over 11 years, it is anything but a flash in the pan. The ongoing growth of the industry is a big reason for institutional investors to increase their exposure. Increasing liquidity is another big contributing factor.
Evertas president Raymand Zenkich adds:
“A lack of adequate insurance for the crypto-assets market is clearly top of the list of concerns for many institutional investors, which is perhaps not surprising when insurers are only providing capacity of around $2 billion for a market that is worth between $250 billion and $300 million. We are working closely with the insurance community to address this issue.”
Addressing these concerns will take years, if not longer. It is impossible to introduce insurance all of a sudden, especially from a regulatory point of view. Some companies actively explore this option, but their products and services are in the early stages of development.