Crypto Quill

Institutional investors are showing increased confidence in the cryptocurrency market, with many planning to raise their crypto allocations over the long term, according to a new survey by Swiss crypto bank Sygnum. The survey reflects a shift in sentiment among traditional finance players, driven by regulatory clarity and the advent of major crypto-based investment products.

Survey Results Highlight Positive Sentiment

Sygnum’s Future Finance survey, released on Nov. 14, included responses from 400 institutional investors across 27 countries. Notably, 57% of respondents indicated they intend to increase their crypto allocations, with 31% planning to do so within the next quarter and 32% within six months. This growing interest marks a shift in the institutional approach to digital assets, with only 5% of respondents planning to reduce their crypto investments.

Martin Burgherr, Chief Clients Officer at Sygnum, noted that clearer regulatory frameworks are aiding this positive outlook. “Among the most important factors is the approval and subsequent launch of U.S. Bitcoin spot ETFs, which has the potential to accelerate institutional adoption of digital assets,” Burgherr said.

Investment Strategies and Market Timing

While the overall outlook is bullish, the survey reveals diverse strategies among institutional investors. Nearly 44% of investors favor single-token investments for their crypto exposure, particularly in major assets like Bitcoin and Solana. In contrast, 40% are opting for actively managed portfolios that can diversify across multiple digital assets, reflecting a risk-managed approach to a volatile market.

Additionally, 36% of respondents who intend to hold their current crypto positions indicated that they are waiting for clearer market signals or more favorable entry points. This segment may be anticipating a stabilization in asset prices before committing to further investments.

Regulatory Clarity and Evolving Risk Perception

Historically, unclear regulations and limited investment mandates have been significant barriers for institutional investors exploring digital assets. However, recent progress in pro-crypto regulation has altered this perception, with 81% of respondents stating that access to better information on crypto could lead to increased investment.

As regulatory concerns ease, focus is shifting to market-specific risks, including high volatility and the security of custodial solutions. Despite ongoing volatility, the survey found that institutions are more concerned with strategic planning and technology deep dives rather than immediate regulatory issues.

Preferences for Layer-1 Solutions and Stablecoins

In terms of crypto investment types, interest is particularly high for scalable layer-1 solutions and stablecoins. Assets like Bitcoin and Solana remain the preferred choices due to their scalability and established track records. Additionally, institutional investors are increasingly interested in Web3 infrastructure, driven by the growth of Decentralized Physical Infrastructure Networks (DePIN) and artificial intelligence.

However, the survey noted a decline in interest in decentralized finance (DeFi) products, which have faced a series of high-profile security breaches. In 2024 alone, DeFi hacks led to a cumulative loss of approximately $2.1 billion from the ecosystem, dampening confidence in the sector.

Shifts in Asset Class Preferences

Compared to 2023, institutional interest has shifted noticeably. Real estate, which was previously a strong asset class for institutional investors, has given way to equity, corporate bonds, and mutual funds. This pivot reflects a desire for assets with more established risk profiles, though there remains a strong appetite for innovative financial products tied to crypto.