Digital asset fund manager survey - January 2025

Bitcoin 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.

Following Bitcoin’s huge rally in 2024, our survey implies that investors are beginning to switch focus to multi-asset offerings. Bitcoin fell 15 percentage points in favour of a multi-asset approach, although the prior survey was unusually high for Bitcoin in terms of which asset has the most compelling growth outlook.

Altcoins Polkadot and Cardano also saw minor improvements in sentiment, but despite XRP seeing significant inflows recently, investors do not see its as being a compelling investment.

Digital asset weighting in portfolios has fallen from 1% to 0.7%, this surprises us but likely due to cautious institutional investors where we saw a reduced allocation. Conversely, most other investor types saw an increased allocation, this was most notable amongst family offices and individual investors with rises in their average portfolio weightings in digital assets from 2.8% to 4.7% and 4.4% to 5.2% respectively.

The high and increased portfolio weighting to bitcoin is likely due to rising prices rather than actively choosing to increase allocations.

While the aforementioned outlook towards a multi-asset approach has improved, we have not seen any measurable allocation yet.

Interestingly, Solana now has the largest portfolio positioning since the survey began back in 2021. This is backed up by our fund flows report, which has indicated a significant rise in inflows in 2024.

 The survey highlights that client demand has risen dramatically, suggesting the allocation more demand driven on advisory mandates rather than discretionary investment decisions.

 Exposure to distributed tech and diversification remain the key reasons for investing.

Despite the recent Presidential executive orders, regulation stubbornly remains the key concern amongst investors. Clearly, those who haven’t invested do not like the volatility inherent in digital assets.

While the executive orders should give greater credibility to the asset class, reputational risk remains one of the key concerns.

For those investors who already have invested, we have seen a substantive decline over concerns over a government ban, although this hasn’t allayed concerns over regulation – many of the survey responses were before the US Presidential executive order, so we expect these concerns to decline over time.

Protocol design and miner concentration have also risen recent, likely due to the recent concerns over quantum compute and the perceived threat to the asset class – we have written recently about this here.

Opinion remains highly polarised over the US Federal Reserve having made a policy error. A considerable number have moved from believing they have not made an error to believe they have “not yet” made a policy error, suggesting doubt is beginning to creep in over FED policy decisions.

About our survey

The January 2025 Survey drew 35 responses from investors who cover ~US$365bn of assets under management.