Global research from digital institutional investment platform VALK shows professional investors are increasingly focusing on cryptocurrency and digital assets as worries about stretched equity valuations and poor yields in the fixed income markets grow.
In a study among professional investors working in eight major economies for institutions holding more than $1 trillion in assets under management in total, found a third (33%) had invested in crypto assets for the first time recently while 55% have increased their allocation to crypto.
Independent research company PureProfile interviewed 100 professional investors working for institutional investors, hedge funds, fund managers, pension funds, investment banks, private equity and venture capital in the UK, US, France, Germany, Hong Kong, Singapore, Australia, and Brazil in October.
Almost all the investors questioned believed the strong performance of the crypto asset class during the COVID-19 crisis had changed institutional views on the sector.
More than half (53%) ‘strongly’ agreed that digital assets were a viable asset class while 45% ‘slightly’ agreed with this view.
Around 91% were ‘concerned’ about stretched equity valuations with 48% saying they were ‘very concerned’, while 90% were worried about fixed income yields with 39% ‘very worried’.
More than a fifth (22%) expected a dramatic increase in the number of investment grade bonds paying negative yields in the year ahead.
The research also found confidence in the crypto sector among institutional sector was strong with more than half (54%) believing the total market capitalisation of cryptocurrencies would grow to $3 trillion or more by the end of next year compared to around $2 trillion now. By 2025, 46% believed total market capitalisation would be $6 trillion or more.