Digital asset fund manager survey - April 2024

Despite the ETF launches, significant barriers to entry remain for digital assets

• In our first survey since the approval of the US spot bitcoin ETFs, bitcoin has retained the top spot, with 41% of investors believing it has the most compelling growth outlook.

• Digital assets weighting in portfolios rose again, from 1.3% to 3%, the highest weighting since the survey began in 2021.

• Investors have been broadening their exposure to altcoins, with Solana seeing a dramatic increase in allocations.

• It is clear from the survey there remain significant barriers to entry to the asset class for specific cohorts of investors.

In our first survey since the approval of the US spot bitcoin ETFs, bitcoin has retained the top spot, with 41% of investors believing it has the most compelling growth outlook.

While Ethereum takes the second spot, investor appetite a has waned since January, while investors are more optimistic for Solana.

Little change was seen in other assets while bitcoin and Ethereum comprise 72% of the total.

Digital assets weighting in portfolios rose again, from 1.3% to 3%, the highest weighting since the survey began in 2021, with the November 2021 survey having the highest historical weighting of 1.7%.

Unsurprisingly, some of the largest contributors to this were allocation from institutional investors who finally had the ability to gain exposure to bitcoin via the US ETFs.

Investors have been broadening their exposure to altcoins, with Solana seeing a dramatic increase in allocations. Looking through the survey responses, this is due to a few large investors allocating, carrying more weight in the survey.

XRP has seen a significant decline, with none of the survey respondents holding it now.

The “Other” assets have a common thread primarily related to DeFi.

The primary reason for adding digital assets is for exposure to distributed ledger technology. Surprisingly, despite price rises since January, an increasing number of investors see digital assets as good value.

Client demand has risen too, as is often the case during positive price momentum. While investing for diversification has declined, we continue to see compelling empirical evidence for Bitcoin being an effective diversifier.

Of those survey respondents that do not have digital assets in their portfolio, regulation remains stubbornly high, although this maybe due to corporate restrictions and the way in which regulatory guidelines are interpreted.

We had expected this to fall, but it is clear from the survey there remain significant barriers to entry to the asset class for specific cohorts of investors – these are typically in the wealth management or institutional space.

Fewer investors believe digital assets lack a fundamental investment case.

Similar to those that have not yet invested, regulatory and political concerns for those that have invested remain stubbornly high too.

Encouragingly, concerns over volatility and custody continue to diminish.

The predominant view on whether the US Federal Reserve (FED) has made a mistake is now “Not Yet”, suggesting many are undecided despite recent better than expected economic releases. Opinion of those that believe they have and have not made an error is almost equal, reflecting a similar polarisation in the broader markets, with bond investors remaining extremely concerned for economic growth and government debt. Recent hawkish comments from the FED are likely why we have seen a pause in digital asset price appreciation.

About our survey

The April 2024 Survey drew 64 responses from investors who cover US$600bn of assets under management.