TRADITIONAL FINANCE GOES TO CRYPTO AS ASSET CLASS IS TIPPED TO OUTPERFORM

(MENAFN- Perceptiona) Major traditional financial institutions are becoming increasingly involved in crypto launching more funds in the sector, with the asset class seen as attractive for risk-adjusted returns, according to new global research (1) by London-based Nickel Digital Asset Management (Nickel), Europe’s leading digital assets hedge fund manager founded by alumni of Bankers Trust, Goldman Sachs and JPMorgan.

The study with organisations invested in the sector, found 43% believe there will be a dramatic increase in traditional financial firms launching crypto funds and investment solutions over the next two years. A further 53% believe there will be a slight increase. Nearly three out of four (73%) of the institutional investors and wealth managers questioned expect a rise in digital asset fund launches in general this year with just 2% predicting a decline.

Increasing involvement by traditional institutions is good news for the sector - nearly one in five (18%) say the involvement of major firms is very positive for their involvement in the sector while 74% say it’s quite positive.

Nickel’s research in the US, UK, Germany, Switzerland, Singapore, Brazil and the United Arab Emirates with organisations who collectively manage around $1.1 trillion in assets, found they believe crypto will be one of their top five asset classes for risk-adjusted returns over the next five years as the table below outlines. Private equity was the next most selected followed by emerging market equities.


Asset class Percentage saying it is one of five assets offering the biggest opportunities to generate attractive risk-adjusted returns over next five years

Cryptocurrency 66%
Private equity 64%
Emerging market equities 61%
Commodities 50%
Real estate 47%
European investment grade debt 47%
US equities 42%
US investment grade debt 42%
European equities 36%
Gold 4%

The research found 75% believe crypto will become part of portfolio allocation by institutional investors within five years.

Companies questioned say actively managed diversified long-only portfolios are the most favoured way to access the digital asset space, followed by actively managed diversified long-short portfolios with passive diversified portfolios the third choice. Arbitrage-focused hedge funds were ranked fourth ahead of ETFs and ETPs.

Anatoly Crachilov, CEO and Founding Partner at Nickel Digital, said: “Traditional finance firms are already making significant strides into the digital assets space and that is only predicted to increase over the next two years.

“The views of institutional investors and wealth managers on the ability of crypto to deliver attractive risk-adjusted returns helps to explain why that is the case, and why professional investors increasingly expect crypto to be part of institutional investors portfolio allocation.

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