Fidelity Digital Asset Survey - Overview

The following is a brief summary of the The Institutional Investors Digital Asset Survey published by Fidelity Investments in June 2020. The report provides a detailed overview on the results from a survey conducted by Fidelity Consulting and Greenwich Associates. With data acquired from a pool of around 800 investors in the European and US markets, these findings gauge institutional interest and the adoption of digital assets, as well as understanding the key barriers to participation in the asset class.

Introduction

Upon completion of the survey, Greenwich and Fidelity concluded that European investors have a more progressive view of digital assets; although it is worth noting that the abundance of concerns from previous years about digital assets among U.S. investors also declined.

Methodology

• A common assessment factor used throughout the 774 global investors was to better understand how institutions, advisors, and investors think about digital assets.
• Additionally, the survey spanned a variety of investor segments, including high-net worth individuals, financial advisors, family offices, crypto hedge funds and venture funds, traditional hedge funds, endowments and foundations.

Highlights

Current Exposure and Channels for Exposure

36% of institutional investors surveyed currently invest in digital assets.

Perception of Digital Assets

Almost 60% of all investors suveyed have a neutral or positive perception towards digital assets.

Appeal of Digital Assets

Almost 80% of investors find something appealing about digital assets. The most appealing characteristics are the lack of correlation with other asset classes, exposure to an innovative technology play and high potential upside.

Obstacles to Investment

The most common obstacles to digital asset adoption are price volatility, concerns around market manipulation and lack of fundamentals to gauge appropriate value.

Categorization of Digital Assets

More than 6 out of 10 investors feel digital assets have a place in their portfolios. Almost 40% of investors believe in digital assets belong in the alternative assets class. 20% of investors believe digital assets belong in an independant assets class.

Digital Asset Investment Products

More than 80% of investors indicated they would be interested in institutional investment products that hold digital assets.

Ownership of Digital Assets

• Multiple factors may be driving ownership of digital assets including derivatives offered by 3rd party brokers.

• 59% of U.S. investors currently have exposure to digital assets. A plausible explanation for this increase is the result of more education, and an increased awareness of the asset class.

• Moreover, 22% of U.S. respondents invested in the asset class have exposure through a futures contract; a drastic turnaround based on the 9% from the previous year. Many hypothesize this increase is a result of the increase in the number of crypto native and incumbent service providers offering cash, and physically settled futures contracts.

• Bitcoin continues to be the digital asset of choice with traditional investors and crypto funds.

• Although only 11% of surveyed investors have exposure to Ethereum, such findings correspond to the fact that Bitcoin is the largest digital asset in terms of market capitalization. Additionally, BTC does have the longest track record, a developed institutional infrastructure through exchanges, and of course has the most publicity from mainstream media outlets.

Key Takeaways

In regards to the global perception of digital assets from the examined markets, almost 60% of all investors surveyed have a neutral or positive perception of the asset class.

From the following image, approximately 58% of U.S. investors expressed a neutral or positive perception of the crypto market; a beneficial 15% increase in confidence from the previous year.

While in contrast, 59% of European investors surveyed have a positive or neutral perception of digital assets.

Appeal Of Digital Assets

- Since investors are always looking to improve risk-adjusted returns, there is a certain extent of appeal of digital assets; outlined by the breakdown above, the asset class has a combination of innovative technology, high potential, and independence from government intervention. All which contribute to the drastic increase in the institutional adoption of the crypto market.

- The survey results are an encouraging reinforcement of the trends observed from conversations clients and prospects have with Fidelity investments. While looking ahead, there is an increasing momentum in digital asset investment and interest across multiple investor segments.

About Consilium

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Consilium analyzes 17,000 trading pairs, over 1000 assets, across 50+ exchanges, and tracks trading activity to the millisecond. Our system monitors raw transaction data, as well as complete price and liquidity information from order books around the globe. These data pipelines power our core products, designed to help funds find alpha and place large orders efficiently in times of thin liquidity.

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