Cryptocurrencies are not known for their stability as an investment, yet growing numbers of institutional investors are diversifying their portfolios with digital assets, according to a survey by Fidelity Investments.
The survey found 47% of institutional investors saw cryptocurrencies as suitable to add to their investment portfolios, and the same percentage of respondents appreciated the innovation behind the digital assets.
Traders can use a commodity trading adviser fund to invest in cryptocurrency and “get exposure without [risk], it is a cash settle so you don’t have any custody risk, nor do you have any [money laundering] tainted coins. These are issues you have all the time otherwise,” said Jan Brzezek, founder and CEO of Crypto Finance AG.
Crypto Finance is an asset management platform that aims to mitigate the risk involved in investing in various cryptocurrencies. Despite the volatility of cryptocurrencies such as bitcoin, a growing number of investors are experimenting with them as an asset class.
Earlier this month, the New York State Department of Financial Services granted a license to Fidelity Digital Assets, a cryptocurrency branch of Boston-based Fidelity Investments.
Tom Jessop, President of Fidelity Digital Assets, told Reuters that demand for digital currencies has been changing, and that they are “Seeing strong demand and greater diversity of client types … there are more traditional investors. When we started it was crypto funds and hedge funds.”
Nonetheless, Bitcoin prices have recently dropped nearly 50% in value from their highest point in 2019, and is trading at around USD$7,000, according to CoinDesk.
One reason why investors may be seeking out cryptocurrencies is global economic instability affecting traditional assets amid an ongoing trade war between China and the U.S. Moreover, 46% of respondents to Fidelity’s survey said that they found digital assets’ low correlation to other assets as a positive factor.