Fidelity: US Pension Funds Explore Crypto And Bitcoin, Eyeing $10 Trillion AUM

According to a recent survey by Fidelity Digital Assets, institutional investors, including US pension plans, are increasingly inclined to invest in crypto assets, including Bitcoin. 

The survey covered various institutional investor segments, including financial advisors, family offices, hedge funds, endowments, foundations, and pension funds. 

Institutional Investors Dominate Crypto Adoption

The survey findings indicate a significant surge in institutional interest in crypto assets. Of the total respondents, 74% expressed their intention to buy or invest in digital assets in the future, a slight increase from 71% in the previous year. 

Notably, US high-net-worth investors showcased a substantial rise in their preference for crypto assets, with future interest surging from 31% to 74% year over year.

Despite the positive sentiment, the survey also illuminated the concerns and barriers faced by institutional investors. Price volatility emerged as the most significant obstacle, with 50% of respondents citing it as their primary concern. 

Other key concerns included the lack of fundamentals to gauge appropriate value (37%), security issues (35%), market manipulation (35%), and regulatory classification of certain coins as “unregistered securities” (33%).

The survey highlighted a notable shift in perception among institutional investors. Investors in the US and Europe reported increased familiarity, improved perception, and a higher number of crypto asset investments. Europe has caught up with Asia in terms of overall adoption and positive perception, while the US still lags behind.

In terms of specific investor groups, high-net-worth investors, crypto hedge funds/venture capital firms, and financial advisors exhibited the highest adoption rates and consideration of digital assets. 

This higher adoption may be attributed to the organizational structures and investment decision-making policies of these groups. On the other hand, family offices, pensions/defined benefit plans, traditional hedge funds, and endowments and foundations showed lower levels of adoption.

Bitcoin ETFs Garner Strong Interest

The survey also explored the features of digital assets that institutional investors find most appealing. The potential for high upside, the opportunity for innovative tech investments, and the enablement of decentralization were cited as the most attractive aspects. 

Additionally, participation in decentralized finance (DeFi) and yield opportunities gained more attention compared to the previous year, while concerns about lack of correlation decreased.

The study suggests that institutional investors in Europe and Asia are more accepting of digital assets in their portfolios than their US counterparts.

Ultimately, Bitcoin exchange-traded funds (ETFs) and multi-digital asset funds, both actively and passively managed, emerged as the most appealing products among surveyed investors. European respondents also expressed interest in digital asset interest accrual offerings. Fidelity Digital Assets also expressed the following: 

The increased adoption reflected in the data speaks to a strong first half of the year for the digital assets industry. While the markets have faced many 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. Institutional investors are experienced in managing through cycles, and the largely inherent factors that they cited as appealing in this study will likely remain as the market emerges from this period.

As of now, the largest cryptocurrency on the market, Bitcoin, has regained the $60,500 threshold after a steep drop of almost 20% from its all-time high of $73,700 on March 14 to $56,000 on Wednesday.

Featured image from Shutterstock, chart from TradingView.com