A survey of institutional investors that oversee some $78.4 billion worth of collective assets said they intend to expand their bitcoin holdings in the next five years.
The survey conducted by Evertas, a cryptocurrency insurance firm, noted that institutional investors include more than a quarter (26%) of pension funds, insurers, and family officers. Hedge funds are also expected to dramatically increase their holdings by 32 percent. A further 64 percent anticipate a “slight” rise in allocation.
84 percent of respondents based their decision on likely improvement in regulatory infrastructure. Many countries including Nigeria are beginning to set up some form of regulation around the market. In September, the Securities and Exchange Commission in Nigeria released a regulatory document declaring crypto assets as securities.
A similar number of respondents (80%) pointed to the growth of the crypto market and an increase in liquidity, making it easier for investors to buy and sell their crypto holdings.
About 76 percent added that they believe there will be more mainstream financial services companies and fund managers getting into cryptocurrencies, and the same percentage said that they believe negative interest rates and yields on bonds will also push more into (or further into) crypto-asset investments.
Raymond Zenkich, President of Evertas says the expected growth calls for the adoption of specialist insurance policies designed for the crypto market.
“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 the capacity of around $2 billion for a market that is worth between $250 billion and $300 million,” said Zenkich. “We are working closely with the insurance community to address this issue.”
However, the arrival of more institutional investors such as pension funds in the crypto market will also bring additional concerns about security and reliability. Consequently, Evertas president Raymond Zenkich has called for greater take-up of specialist insurance policies designed for the crypto market.