a study reveals the behavior of institutions in the bear market!

Funds continue to invest in bitcoin and Ethereum despite the downturn in the crypto asset market. They took advantage of lower prices to buy these assets in the hope that there would eventually be a rebound. Perceptions of cryptocurrencies have also improved year over year.

How do institutional investors behave in a bear market?

No study had ever measured the behavior of institutional investors when the cryptocurrency market is down. These institutional players started investing in this asset class post-Covid, as they continue to support Bitcoin and Ethereum (their favorite cryptocurrencies), according to a study by Fidelity Digital Assets, which interviewed a thousand investors in Europe, the US and Asia .

Since 2018, Fidelity Digital Assets has conducted an annual study to understand how institutional investors view and approach digital assets, including cryptocurrencies. The official announcement was made on October 27, 2022: the results of the research for 2022 have been published.

The study focuses on the first half of 2022, when the main crypto assets had not yet fallen, but clearly started to fall. Despite these obstacles, nearly 60% of institutional investors surveyed say they have invested in digital assets during this time.

Year-over-year adoption increased by 9 percentage points (42%) in the United States and 11 percentage points (67%) in Europe, but fell slightly in Asia (69%), where market representation is already the highest. .

“While markets have faced headwinds over the past few months, we believe the fundamentals of digital assets remain strong and the institutionalization of the market over the past few years has allowed it to weather recent events.” said Tom Jessop, director of Fidelity’s digital assets unit.

Another important statistic for institutional investors’ long-term view of the market: nearly three-quarters of investors (or 74%) said they plan to buy digital currencies in the future.

For those who remain skeptical of cryptocurrencies, and even those who invest in cryptocurrencies, market volatility remains a major barrier to adoption. They also point to the complexity, valuation and risks of manipulating these assets as other barriers to adoption.

The volatility and manipulation of the market is scary

To date, the weight of institutional players in the cryptocurrency space is unknown. While their numbers have increased from last year, it is impossible to say how much of the cryptocurrency wealth belongs to institutions.

Banks are known to own only 0.01% of the total value, or $9.4 billion, in cryptocurrencies.

Most of the institutional investors surveyed agree on one thing: price volatility is the biggest obstacle to the adoption of digital assets. While some also mentioned the risks associated with the complexity of the markets, others pointed to the risks associated with market valuations. We are talking about the risk of paying a high price for assets.

Another important data collected during the research conducted by Fidelity Digital Assets in 2022: more than a third of investors are concerned about the risk of market manipulation, preventing them from fully accepting cryptocurrencies.

That doesn’t stop many companies, including MicroStrategy and Tesla, from holding cryptocurrencies in their wallets. In the first case, MSTR continues to accumulate Bitcoin despite the bear market. Michael Saylor’s former company holds no less than 130,000 bitcoins. On the other hand, Grayscale Trust manages more than 500,000 bitcoins.

The Fidelity Digital Assets 2022 study is not just about the adoption of cryptocurrencies and other digital assets. It also addresses investor perceptions of digital assets. A comprehensive summary of the study’s key findings is now publicly available.

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