Recent research conducted by Bank of America reveals that the majority of global fund managers are still reluctant to invest in cryptocurrency, despite the recent positive trends seen in the market. The survey, which involved 211 fund managers overseeing a total of $504 billion in assets, indicated that approximately three-quarters of respondents do not hold any crypto assets at all.
For those managers who do have exposure to digital assets, their allocations are relatively small. On average, these portfolios allocate just 3.2% to cryptocurrencies. Breaking it down further, only 6% of managers have around 2% exposure, 2% hold 4%, and a mere 1% report allocations exceeding 8%. When averaged across the entire group, crypto represents only 0.3% of assets under management.
In response to these findings, Bloomberg ETF analyst Eric Balchunas suggested that the minimal exposure may be a result of past investment mistakes made by these funds. He pointed out that managers who had previously made incorrect calls on broader markets might now be approaching the fast-growing crypto industry with caution.
According to Balchunas:
“Aren’t these the same ‘global managers’ who claimed they were divesting from America in Q1? Perhaps they should consider surveying individuals with better returns.”
On the other hand, some industry experts believe that the low participation rate could signal untapped potential within the crypto market. Frank Chapparo, the head of content at GSR, expressed his views by stating:
“Wall Street has barely dipped its toes in, and Bitcoin is still at $120,000. We are headed towards significantly higher levels.”
Despite the historically strong returns offered by digital assets, their high volatility remains a concern for many institutional investors. This risk factor is likely why institutional investors have limited their exposure to cryptocurrencies.
Nevertheless, there is a growing interest in cryptocurrencies among institutional investors. In the past year, investors have increasingly gained exposure through investments in crypto companies and crypto-focused exchange-traded funds (ETFs). Additionally, the emergence of Bitcoin-centric treasury companies that have added substantial amounts of the leading cryptocurrency to their balance sheets has also contributed to this trend.
Furthermore, the regulatory landscape in the US is fostering broader adoption of the crypto industry. Recently, President Donald Trump signed an executive order allowing digital assets to be included in 401(k) retirement plans. This move is expected to prompt fund managers to reassess their positions and potentially increase their allocations to cryptocurrencies.
