The overwhelming majority of advisors who responded to the survey said digital assets, when mixed up with more traditional ones such as stocks and bonds, can help deal with threats such as inflation.
A study of 50 wealth managers holding a total of $1.026 trillion of assets found that 94 per cent of them think that digital assets – a term covering entities ranging from bitcoin to “smart contracts” – can diversify portfolios, this publication can exclusively report.
The study found that six in seven (86 per cent) respondents to the survey want to see digital assets combined with traditional asset classes to produce “all-weather” income strategies to help cope with inflation and debasement of fiat currencies.
The market continues to face obstacles, however.
“For many, their outlook for major digital assets such as bitcoin and Ethereum is positive, but our study also reveals challenges and hurdles for the market. Many of our survey respondents acknowledged that there are legal and regulatory restrictions that could prevent them from investing in digital assets, and these need to be addressed by the industry in cooperation with regulatory authorities,” Dr Jez Mohideen, CEO of Laser Digital, said
Volatile price movements in bitcoin and other cryptocurrencies, the demise of some “stablecoins” and the collapse of FTX, a crypto exchange, last year, have cooled ardour for these entities. Regulators have expressed worries, and there is still a patchwork of rules ranging from the liberal – such as in Switzerland, Singapore and Canada – to the highly restrictive, such as in mainland China. (See this article for an overview of why digital assets matter for wealth managers; this article from 2022 also gives an overview.)
Some 90 per cent of the respondents said that it is important to have the backing of a large traditional financial institution for any digital asset fund or investment vehicle before they or their clients would consider putting money into it. Six in seven (86 per cent) of the wealth managers interviewed are positive about the digital asset class in general and bitcoin and Ethereum in particular over the next 12 months. Just 6 per cent of respondents are negative about the outlook for the sector while 8 per cent are neutral.
Nearly nine in 10 (88 per cent) say they or their clients are currently considering investing in digital assets. More than half (52 per cent) said bitcoin and Ethereum provide a foundation of the “Web 3.0” economy and a long-lasting source of investment opportunities.
The advisors surveyed work for pension funds, wealth managers, family offices, hedge funds and investment funds, insurance asset managers and sovereign wealth funds. They are based in Europe, the Middle East, the US, China, Hong Kong, Singapore, South Africa and Brazil.
The wealth managers interviewed reported a wide range of maximum
allocations to digital assets under their risk boundaries. A
third (34 per cent) of those questioned say that they can invest
up to 5 per cent while 22 per cent can invest up to 4 per
More than half (54 per cent) say their and/or their clients’ total percentage exposure to digital assets will be between 5 per cent and 10 per cent over the next three years.