Institutional Adoption of Crypto: 64 Percent of Investors Will Increase Their Investments in Three Years

Despite unfavorable economic conditions and a prolonged bear market, institutional adoption of cryptocurrencies is on the rise. Investors have remained resilient and expressed optimism and strong sentiment about the role of crypto in the future of financial settlements.

A recent survey conducted by leading U.S. crypto exchange Coinbase revealed that 64 percent of institutional investors currently investing in crypto intend to increase their allocation to digital assets over the next three years. None of the respondents expect their allocated funds to decrease in the same timeframe.

Institutional Adoption of Crypto on the Rise

The Coinbase survey was conducted from October 19 to November 6, 2023, involving 250 decision-makers from hedge funds, venture capital firms, pension funds, foundations, family offices, sovereign wealth funds, and asset management companies in the U.S. The survey focused on institutions currently investing in crypto, those evaluating whether to invest, and those that have previously invested.

In the past 12 months, 33 percent of respondents increased their allocation to crypto, 17 percent decreased it, and 50 percent remained unchanged. About 45 percent of institutions that have not invested in crypto stated they are likely to venture into the sector in the next three years.

Coinbase noted an improved sentiment from last year’s survey, as a greater number of investors indicated they expect price increases in crypto assets in 2024. Compared to 8 percent of participants who expected price increases in 2023 from the October 2022 survey, 57 percent of respondents are looking forward to the growth of crypto assets next year.

Blockchain Will Replace Conventional Systems

Furthermore, 73 percent of surveyed investors see blockchain as a faster and more secure payment method than the traditional banking system. Approximately 66 percent believe that blockchain will eventually replace conventional systems in payments.

Significantly, 76 percent of respondents stated that the lack of clear crypto regulations in the U.S. hinders the country’s positioning as a leader in financial services, emphasizing the need for regulatory clarity. Investors believe that advancements in relationships and the emergence of crypto applications in the real world will be the next catalyst for industry growth.

Meanwhile, crypto has secured 3rd place among 15 asset classes in terms of their ability to generate attractive risk-adjusted returns over the next three years, alongside private equity and U.S. stocks.