New research has highlighted the growing interest from UK institutional investors and wealth managers for cryptoassets with more than two thirds of those asked pointing to crypto increases in portfolios and a large portion (around 20%), expecting to "dramatically increase" their exposure to cryptoassets between now and 2023.
London-based Nickel Digital Asset Management (Nickel), Europe's largest regulated crypto hedge fund manager, was founded by senior traders and investment professionals formerly from major financial institutions including Goldman Sachs and JPMorgan. It believes that the UK is one of the most attractive markets for hedge fund managers focusing on crypto and digital assets, as new research reveals potential for strong growth in the country.
Research
Nickel Digital commissioned a survey with 23 institutional investors and wealth managers in the UK who collectively oversee US$66.5bn in assets and who currently have some exposure to digital assets. The survey revealed that six of those interviewed expect to dramatically increase their exposure to cryptoassets between now and 2023, and another 11 who said they will also add to their exposure.
The three main reasons given for greater allocation to digital assets is the structural long-term capital appreciation prospects of cryptoassets - the view cited by 16 of the 23 UK-based professional investors. This is followed by nine who said having some exposure to cryptoassets, they have become more comfortable and confident in how the asset class works and the infrastructure around it, and the same number (nine) who said it was because of the improving regulatory environment.
Hurdles
However, the survey also identified several hurdles to investing into cryptoassets. Some 16 of the 23 UK based professional investors interviewed cited concerns about the relative size of the cryptoasset market and its liquidity as an issue, and the same number cited a lack of transparency in the market.
Some 15 of the 23 UK based professional investors said concerns over custodial services for cryptoassets was a hurdle in terms of investing in the asset class, and 15 of those interviewed also said this about market volatility.
Anatoly Crachilov, CEO and Founding Partner of Nickel Digital, said: "Despite the recent correction in the crypto market, our survey confirms there is an ever-increasing appetite for this asset class among professional investors, willing to take constructive longer-term view on this asset class.
"We are glad to see increasing adoption of digital assets by many professional investors in the UK."
Fiona King, Nickel's Head of Institutional Sales added: "We are looking to address many of the concerns investors might have, not least the high volatility of crypto market. To that end, the recent performance of our market-neutral arbitrage fund demonstrated its ability to protect capital, as well as to deliver consistent and repeatable returns during turbulent times, such as April and May 2021."
