09.16.2019
By Rob Daly

Institutions Inch Closer to Crypto

Institutional investment into crypto is coming closer according to the participants of the recent Crypto Connect conference hosted by industry analysis firm Tabb Group in Midtown Manhattan.

Held under Chatham House Rules in which speakers could be quoted but not identified, the discussion focused on institutional investors warming to the digital currency and asset markets.

The fear of missing out remains a significant driver of institutional interest, but many high-net-worth individuals and family offices are investing in the cannabis industry to earn the 10x return that they experienced in the early days of the digital currency and asset markets, according to one speaker.

Multiple participants noted that they received investments from a few institutional investors, including a historic university endowment.

However, another speaker responded that it would be another five to seven years before pensions, endowments, and other institutional investors could market regular investments.

In the meantime, the number of crypto-based hedge funds continues to grow with backers launching 329 funds in 2018, which is up from 53 and 224 funds in 2016 and 2017 respectively, according to data presented by a participant.

The US remained the home of the highest number of crypto hedge funds with approximately registered 400 funds while China and Hong Kong had the second-highest amount with about 80 funds.

The amount of assets under management is also growing, according to the same participant.

Although funds with $5 million to $10 million AUM remain the most prevalent, he was aware of a few crypto funds that have reached AUMs as high as $100 million.

The growth in investment is in line with research conducted by the Tabb Group, which it shared at the conference.

Of the asset owners the firm surveyed, 39% expected to maintain the same level of allocations in digital assets over the next five years while 33% expected to increase their allocations. Only 6% of those polled said that they planned to decrease their allocations and the remaining 22% were not sure.

Asset managers, on the other hand, were more bullish in their allocation with 55% planning to increase their allocation, 27% expecting it to remain, and 18% who are not sure of their allocation strategy.

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