Digital Asset Fund Manager Survey - Aug. 24

• Since the approval and launch of the US spot-based Ethereum ETFs, the growth outlook and sentiment for Ethereum have dramatically improved.

• The primary reason for adding digital assets remains to gain exposure to distributed ledger technology. Although, now on an equal footing is client demand, which has risen 5 percentage point since the April survey.

• Those that haven’t invested cite volatility, lacking fundamentals and reputational risk as the key reasons not to.

• For those investors who already have invested, we have also seen a big decline in concerns of a government ban and regulation.

Since the approval and launch of the US spot-based Ethereum ETFs, the growth outlook and sentiment for Ethereum have dramatically improved.

Bitcoin and Solana are the only other digital assets that investors significantly view as having a positive growth outlook.

A small group of investors still believe that no digital asset has growth prospects, but this percentage has decreased from 3% to 2% over the quarter.

Digital assets weighting in portfolios varies dramatically depending on the type of investor. Those with the most flexible investment mandates, Family offices and Individuals, tend to have the highest portfolio weightings at 10% and 23% respectively.

Of those surveyed, Wealth Managers and Institutional investors have the lowest positions with just 2.4% and <1% respectively, this tallies with 13f filing data.

Investor allocations have changed little despite the improved outlook for Ethereum. The most notable changes have been minor reductions from Bitcoin and Ethereum and into multi-asset and Solana.

Investors with smaller AuM tend to hold a much wider mix of digital assets and highlight that Polkadot, Uniswap and TON are increasingly mentioned, although positions are relatively small.

The primary reason for adding digital assets remains to gain exposure to distributed ledger technology. Although, now on an equal footing is client demand, which has risen 5 percentage point since the April survey.

Further, we have also seen a significant rise in holding digital assets for diversification purposes and a fall in those holding for speculative reasons.

Of those survey respondents that do not have digital assets in their portfolio, volatility has now become the key concern, having risen considerably from the prior survey in April.

Corporate restrictions and regulations, while high, have both fallen dramatically, presumably following recent regulatory approvals of both Bitcoin and Ethereum ETFs in the US and Hong Kong.

Lacking fundamentals and reputational risk have both risen and are implying they remain an important reason why some do not invest.

For those investors who already have invested, we have also seen a big decline in concerns of a government ban and regulation – likely due to recent comments from Republican candidates at recent events such as Bitcoin Nashville and the recent SEC spot ETF approvals.

Opinion is increasingly polarised over whether the US Federal Reserve has made a policy error yet, with almost equal amounts in those that believe they have, have not and undecided.

We believe it is becoming increasingly apparent that the FED has made a policy error, given the recent payrolls report.

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.

The August 2024 Survey drew 48 responses from investors who cover ~US$600bn of assets under management.