5 min readBitcoin allocations increase amid Persistent Regulatory Concerns
Bitcoin Leads Growth Outlook: Bitcoin's sentiment has surged, now nearly double that of other digital assets, with increased allocation among investors.
Decline in Ethereum Sentiment: Ethereum is at its lowest sentiment since 2021, while Solana remains steady with minimal changes in allocation.
Reduced Portfolio Weighting: Digital asset weightings have dropped as investors shift to fixed income; family offices and hedge funds hold the largest allocations.
Regulatory Concerns Persist: Regulatory issues are a major barrier despite ETF approvals, while diversification remains a key reason for digital asset interest.
Bitcoin has leaped ahead in terms of which digital asset has the most compelling growth outlook, having risen by 7 percentage points since the July survey. Bitcoin is now almost double that of any other digital asset.
Ethereum’s sentiment has halved and is at its lowest since our survey began in 2021. In the altcoin space, Solana has remained steady at 9.5% of the responses, while there has been a rise in those who believe none (10%) of the assets have a compelling growth outlook.
Digital assets weighting in portfolios has fallen from 1.7% to just 1% due to a reallocation from risk assets to fixed income as inflation falls.
The survey has also attracted a record number of larger institutional managers, where the belief that the asset class lacks fundamentals remains prevalent.
Those with the most flexible mandates, family offices and hedge funds, have the largest portfolio weightings in digital assets.
Bitcoin is the only digital asset to see any measurable increase in allocation, seeing a rise of 5% or survey respondents who own bitcoin
Despite the very poor sentiment towards Ethereum, allocation to the asset class has remained little changed. Conversely, despite the very positive sentiment towards Solana, as highlighted in our fund flows reports, there has been little change to positions there too.
Allocations to other altcoins remain very low.
The primary reason for adding digital assets remains to gain exposure to distributed ledger technology and has consistently been the case for the last 2 years.
Despite prices rises, an increasing number of survey respondents see digital assets of being good value and see add for its diversification merits.
The survey also suggests that there has been a drop in client demand, this may be due to its easier accessibility on investment platforms.
Despite recent approvals in the US for ETFs, we have seen a sharp increase in the number of investors citing regulation as the key blocker to them investing, the rise in accessibility also alludes to this as well.
All other issues have fallen, most notable being corporate restrictions and lacking fundamentals. Although we would note that the respondents with the largest assets under management are in stark contrast to this broader viewpoint.
For those investors who already have invested, regulation and political concerns remain stubbornly at the top of investor concerns despite the significant strides made in regulatory approval of Bitcoin and Ethereum ETPs.
Investors seem much less concerned with protocol design and hashpower concentration.
Opinion remains highly polarised over the US Federal Reserve having made a policy error. Although there is a decreasing number who are undecided, this is perhaps following the September 50 basis point interest rate cut.
About our survey
The October 2024 Survey drew 43 responses from investors who cover ~US$999bn of assets under management.
