Institutional Investors Broaden Altcoin Exposure, Opting for Solana: CoinShares Report
Summary:
Institutional investors are increasingly turning to altcoins like Solana (SOL), according to a CoinShares report. Despite a decline in Ripple's XRP holdings, investment products related to the cryptocurrency are still being allocated. Bitcoin and Ethereum continue to lead in terms of growth potential, while concerns over volatility and custody for crypto investments are decreasing. Despite growing interest, investors note significant barriers to entry into the crypto market, primarily regulatory challenges.
Altcoins, such as Solana (SOL), are seeing increased investments from institutional investors, including wealth managers and hedge funds, according to a report by CoinShares. The report, penned by James Butterfill, the company's head of research, reveals a growing optimism for SOL, according to a survey of investors managing $600 billion in assets. In this survey, almost 15% of participants stated they had invested in SOL, a notable rise from a previous survey in January, where none of the investors had put money into the altcoin. On the other hand, there was a significant drop in investment in Ripple's cryptocurrency, XRP.
The report also shows that investment products related to XRP are still being allocated despite the lack of holding among the surveyed institutions. For the week ending on April 19, CoinShares documented small inflows of $1.3 million to XRP products.
Solana found its place as third on the list of cryptocurrencies with the most promising growth outlook, with nearly 15% of respondents choosing it. In January's survey, this figure was just above 10%. Bitcoin (BTC) maintained its leading position with 41% of respondents believing in high growth potential. Ethereum (ETH) followed as a close second, with a bit over 30% of the participants showing faith in its growth. However, the report notes a decrease for ETH since January.
The survey results also indicate an increase in the percentage of cryptocurrencies in investors' portfolios since January, from 1.3% to 3%. This is the highest percentage since the beginning of these surveys in 2021. Institutional investments largely contributed to this increase.
Despite the increased interest in cryptocurrencies, the investors surveyed reported several significant barriers to entering the market. Regulation remains the most cited reason by investors not currently holding crypto. For those who do hold crypto investments, regulations and political factors are the main perceived threats. The research highlights a positive sign though, as concerns over volatility and custody continue to decrease.
It's important to note that despite the growth of cryptocurrencies, stocks continue to hold the majority at over 55% in the asset class categories. In terms of investment in cryptocurrencies, individual investors lead the pack, followed by institutions. The primary motivation for purchasing digital assets was exposure to distributed ledger technology. Additionally, despite the price surge of most cryptocurrencies since January, the proportion of those seeing them as a "good value" rose from less than 15% to over 20%.
Published At
4/26/2024 5:41:30 AM
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