Institutional Investors Drive Crypto Investment Surge
Despite market volatility and fraud concerns, investment in cryptocurrencies is gaining momentum, according to a recent KPMG survey. In 2023, 22% more financial services organizations offered cryptoasset products and services to clients compared to 2021. Institutional investors also increased their involvement, with 26% including cryptoassets in their portfolio.
Half of respondents in financial services now actively offer at least one type of cryptoasset product or service, up from 41% in 2021. Institutional investors also reported growing exposure, with 39% now holding cryptoassets directly or indirectly, up from 31% in 2021.
Demand from Institutional Investors
KPMG’s partner specializing in cryptoassets, Kunal Bhasin, attributes the growing demand for cryptocurrencies to institutional investors seeking long-term investments rather than short-term profits. The rising value of cryptocurrencies, such as Bitcoin’s significant price increase in 2023 and 2024, may also contribute to this demand.
Maturing Market Encourages Investment
According to the survey, 67% of investors cite the maturing crypto market and enhanced security measures as key reasons for investing in cryptoassets. Strong market performance is also a factor, with 58% of investors citing it as a motivation.
Industry Strength After FTX Scandal
The crypto industry has faced challenges, including the FTX crypto-trading platform scandal. However, Bhasin believes the industry has emerged stronger, with new frameworks and risk management strategies implemented. While major institutions initially stepped back after the fraud, they are now re-entering the market, adding a sense of maturity that encourages others to invest.
Growing Confidence and Influence
Bhasin emphasizes that fraud and scandals are not unique to the crypto industry and that the industry has taken steps to address these issues. He believes that crypto is here to stay, and the growing involvement of institutional investors is a testament to its potential.
