Institutional Adoption: 64% of Investors to Increase Their Crypto Allocations in 3 Years

Despite unfavorable economic conditions and the persistent bear market, institutional cryptocurrency adoption has been on the rise. Investors have remained resilient and expressed optimism and strong sentiment about crypto’s role in the future of financial settlements.

A recent survey conducted by leading U.S. crypto exchange Coinbase found that 64% of institutional investors currently investing in crypto intend to increase their allocations for digital assets in the next three years. None of the respondents expect their allocations to decrease within the same time frame.

Institutional Crypto Adoption on the Rise

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

In the past 12 months, 33% of the respondents increased their crypto allocations, 17% decreased theirs, and 50% remained unchanged. Around 45% of institutions not invested in crypto said they are likely to venture into the sector in the next three years.

Coinbase noticed improved sentiment from last year’s survey, as a larger number of investors said they expect the prices of crypto assets to rise in 2024. Compared to 8% of participants who expected prices to increase in 2023 from a survey in October 2022, 57% of respondents look forward to crypto assets surging next year.

Blockchain to Replace Conventional Systems

Furthermore, 73% of investors surveyed see blockchain as a faster and more secure payment method than the traditional banking system. Roughly 66% believe blockchain will eventually replace conventional trade-settlement systems.

Notably, 76% of the surveyees said the absence of clear crypto regulations in the U.S. hampered the country’s positioning as a leader in financial services, emphasizing the need for regulatory clarity. Investors believe that progress in relations and the emergence of real-world crypto applications will be the next catalyst for industry growth.

Meanwhile, crypto ranked third among the 15 asset classes evaluated for their abilities to generate attractive risk-adjusted returns in the next three years, next to private equity and U.S. equities.