90% of institutional investors are bullish on cryptocurrency, so why aren't they buying?
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90% of institutional investors are bullish on cryptocurrency, so why aren't they buying?
Due to unclear legal regulations, some institutional buyers have expressed interest in crypto assets but are only observing.
Navigating Web3 tides with focused insightsRecently, I came across an interesting survey.
Laser Digital, the crypto venture arm of Japan's Nomura Securities, conducted a survey covering over 300 institutional investors across 21 countries in Europe, the Middle East, Asia, South Africa, and Latin America, managing a total of $4.9 trillion in assets. The participants included wealth management firms, pension funds, hedge funds, investment funds, and insurance asset managers.
The results show that 96% of respondents recognize the potential of cryptocurrencies, viewing digital assets as "an opportunity for investment diversification," on par with traditional asset classes such as fixed income, cash, equities, and commodities.
Regarding views on crypto assets, more than four-fifths (82%) of professional investors are optimistic about the overall outlook for the crypto industry, particularly emphasizing their positive sentiment toward Bitcoin and Ethereum over the next 12 months. Only a small minority (3%) expressed negative views, while the remaining 15% maintained a neutral stance.
When considering investment options, 88% of respondents said they or their clients are actively considering investing in digital assets. Specifically regarding Bitcoin and Ethereum, nearly half (48%) of participants view them as foundational elements of the emerging Web 3.0 economy, offering long-term investment opportunities. Another quarter (26%) see these assets as highly speculative but with long-term potential, while the remaining 26% primarily regard them as highly speculative.
Institutional investors aren't just focused on the two largest cryptocurrencies—88% of respondents indicated they see value in carefully selected cryptocurrencies beyond Bitcoin and Ethereum, while only 12% believe expanding into other cryptos offers no value.
Investors’ maximum allocation to digital assets within their risk tolerance varies. 22% of respondents said they could allocate up to 5% of their portfolio, while 30% indicated a maximum of 4%.
Looking ahead, nearly half of participants (45%) said they or their clients plan to have total exposure to digital assets ranging from 5% to 10% over the next three years, with only a tiny fraction (0.5%) indicating they would have no exposure during this period.
In terms of preferred exposure strategies within digital asset categories, Momentum (profiting when prices continue moving along past trends) emerged as the most popular choice, favored by 80% of investors. Value (profiting when prices revert to a prior equilibrium) followed, preferred by 68% of respondents.
Carry (profiting when prices remain stable) was favored by 61% of respondents. However, the vast majority (77%) said they prefer a combination of all these factor-based risk strategies.
All of the above paints a very optimistic picture, yet there are two notable "risk factors" worth noting.
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90% of professional investors surveyed said it is important for them or their clients to see support from "major traditional financial institutions" before committing capital to any crypto asset fund or investment vehicle.
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Approximately 75% said "legal or regulatory restrictions" may prevent their firm or clients from investing in crypto-related funds or products.
In summary, buy-side institutions—and their end clients—are curious or interested in crypto assets, but unclear regulations and the lack of accessible instruments like ETFs keep them in wait-and-see mode.
This aligns with my own experience—many buy-side institutions I’ve spoken with express interest in crypto assets but are not investing yet, though they’re closely watching developments.
Compared to the stock market, the crypto world lacks tools or products like ETFs and mutual funds, leaving most retail investors to directly speculate in the market, rushing in en masse and then fleeing just as quickly.
During the so-called "Grayscale bull run," industry insiders proclaimed, "There will be no more major bear markets because institutions will dominate the future." Yet it turned out that many so-called institutions either collapsed or exited faster than anyone else.
From this perspective, Bitcoin ETFs are profoundly significant.
As Timothy Massad, former chairman of the U.S. Commodity Futures Trading Commission (CFTC), wrote: "Bitcoin ETFs will provide retail investors a way to invest in cryptocurrency without actually purchasing it or dealing with the complexities of custody."
Investing in a Bitcoin ETF is equivalent to indirectly owning Bitcoin. Compared to traditional trading methods, this approach lowers the barrier to entry by eliminating the need for investors to learn how to use cryptocurrency exchanges or OTC platforms, manage wallets, or handle private keys. It also avoids platform risks (such as exchange hacks or inadequate regulation) and self-custody risks (like losing access).
Moreover, Bitcoin ETFs offer institutional investors a compliant channel to gain exposure to Bitcoin. This means traditional fund managers can now incorporate Bitcoin into portfolios via ETFs. For example, major institutional players in the U.S. market—such as pension funds—are currently restricted by policy from direct participation in crypto markets. But if Bitcoin is packaged as an ETF, pension funds could include it as a compliant investment instrument in their portfolios.
However, Bitcoin ETFs still face a formidable regulatory hurdle. At least in the U.S., the current regulatory environment for crypto assets remains unfriendly and chaotic, lacking clear compliance guidelines. Recently, the SEC has filed lawsuits against Coinbase and Binance, signaling a stricter regulatory stance. Almost any crypto asset can be labeled a "security" and subjected to aggressive enforcement actions.
Therefore, both individual and institutional investors are waiting for regulatory clarity. They're not afraid of a swift, decisive ruling—they fear ambiguity and endless delays. One year, two years pass; life is short. How many bull markets can we realistically experience?
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