A recent survey conducted by KPMG in Canada and the Canadian Association of Alternative Assets & Strategies has revealed a significant increase in institutional investors’ interest in cryptocurrencies. Nearly 40% of institutional investors had some exposure to crypto assets in 2023, up from 31% in 2021. The survey found that a third of respondents reported having at least 10% of their portfolio allocated to crypto assets, compared to only a fifth of respondents two years ago. The reasons behind institutional investors’ growing interest in cryptocurrencies include the maturing market and custody infrastructure, as cited by 67% of respondents, and the strong market performance of cryptocurrencies, mentioned by 58% of respondents.
The market performance of cryptocurrencies, particularly Bitcoin and Ethereum, has been remarkable in recent years. Bitcoin experienced a 150% increase in 2023 and is up nearly 60% year-to-date, while Ethereum has risen by approximately 60% in 2024. The approval of spot Bitcoin exchange-traded funds (ETFs) by the US Securities and Exchange Commission (SEC) in January has played a significant role in boosting institutional investors’ access to the crypto asset class. This decision has made it easier for institutional investors to include cryptocurrencies in their portfolios. Additionally, a poll conducted by the Digital Assets Council of Financial Professionals found that 35% of financial advisers intend to recommend crypto-related opportunities to their clients, compared to 21% in the previous year.
The increased interest in cryptocurrencies has led to a broader coverage of digital assets by major sell-side firms, such as JPMorgan and AllianceBernstein. This expanded research coverage has contributed to more sophisticated and nuanced conversations between investor relations (IR) professionals and institutional investors. IR teams have noticed a significant shift in investor understanding and knowledge of cryptocurrencies, with discussions focusing on more advanced topics compared to previous years. The growing interest in crypto assets has also been observed in Hong Kong, where regulatory clarity and recent approvals of Bitcoin and Ethereum spot ETFs have led to a surge in institutional and retail investor focus.
In Hong Kong, OSL Group, a digital assets company, has experienced a significant uptick in interest from investors, prompting a more proactive approach to investor relations. The city has launched its first batch of ETFs focused on cryptocurrencies, potentially posing competition for popular Bitcoin products in the United States. Harvest Global Investments Ltd. and a partnership between HashKey Capital Ltd. and Bosera Asset Management (International) Co. listed Bitcoin and Ether ETFs in the city, furthering the accessibility of cryptocurrencies to institutional and retail investors. The increasing interest in crypto assets worldwide is indicative of a growing acceptance and recognition of these digital assets within the traditional financial ecosystem.
Overall, the survey results and market trends indicate a clear increase in institutional investors’ interest in cryptocurrencies, driven by factors such as market maturation, strong performance of digital assets, and regulatory approvals of crypto-related products. The approval of spot Bitcoin ETFs in the US by the SEC has significantly improved institutional investors’ access to the crypto asset class. This growing interest has also led to more sophisticated discussions between IR professionals and institutional investors, highlighting a shift towards deeper understanding and engagement with the digital assets space. The surge in interest in cryptocurrencies is not limited to specific regions, as evidenced by the growing focus on digital assets in Hong Kong and other global financial markets.
