Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
Commissioning a survey of US and UK institutional investors in July of 2020, Evertas crypto insurance company came away with optimistic results. As always, low interest rates and bond yields shift investors’ gaze toward the cryptocurrency sector. However, there are still lingering concerns that need to be resolved.
Good News for Disciplined Bitcoin Holders
Although we are still a long way from BTC’s 2017 peak of $20,000, the trajectory continues to trend upwards. Even the coronavirus fallout represented a mere blip on the upwards BTC curve toward the magical $100,000 per BTC threshold.
Moreover, the stock-to-flow (S2F) value chart places BTC within the reach of the traditional store of value (SoV) commodities, such as silver and gold. S2F evaluates the total currency available vs its new production. In other words, the higher the S2F, the more it indicates scarcity, which in turn increases its SoV.
The latest survey conducted by Pureprofile market research agency, commissioned by Evertas, bolsters this long-term outlook for BTC. Institutional investors are key players in breaking the remaining barriers to BTC’s mass adoption, alongside all the other products brought to bare by blockchain technology, such as Decentralized Finance (DeFi).
Survey Suggests Upcoming Boost to the Crypto Space
The surveyed 50 investors, 25 in the UK and 25 in the US, account for $78.4 billion worth of assets, which represents a good starting point for gauging the institutional investor mood. Their degree of enthusiasm varies depending on the type of investment, but most are eager to ramp up their involvement with the crypto sector.
64% of surveyed institutional investors foresee an increase in crypto investments in the domain of insurance, pension funds, sovereign wealth funds, and family offices. However, they only forecast this increase as “slight”.
26% of surveyed institutional investors foresee significant rise in investments related to BTC over the period of the next five years.
Overall, regardless of the degree of increase, 90% of institutional investors foresee the rise of their involvement with crypto assets. As to the reasons for this almost unanimously positive interest in the crypto space, they have put forward the following reasoning:
More transparent and consolidated regulatory framework, according to 84% of respondents.
Improved liquidity by expanding the crypto market, according to 80% of respondents.
The participation of mainstream financial companies and fund managers will spur the adoption rate even further, according to 76% of respondents.
Likewise, continued low-interest rates across the board will exert pressure to shift to crypto, also according to 76% of respondents.
Just over half of surveyed investors still hold doubts about a couple of insufficiently resolved issues:
Insurance for crypto investments does not match the strength of the insurance in the traditional finance, according to 56% of respondents.
Compliance and working procedures of crypto companies servicing institutional investors are not as rigorous as they should be, according to 54% of respondents.
On both of these issues, the surveyed investors expressed a “very concerned” level of apprehension. Lastly, given the fact that Evertas is a crypto insurance company that raised $2.8 million of seed money this year, this survey serves to pinpoint critical crypto gaps moving forward.
To paint a clearer picture of the lack of insurance problem, only about $2 billion of insurance currently covers up to $250 billion worth of assets, according to Evertas COO Raymond Zenkich.
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firms specializing in sensing, protection and control solutions.