Crypto: Institutional investors want single token exposure, survey finds

“Over 85% of institutional crypto investors in our study believe that being regulated is essential to building trust. This is further confirmation that Sygnum’s founding strategy to be fully regulated from day one in all our regions was the right one.”

Sygnum Bank has published its inaugural institutional investor crypto survey report, titled “Future Finance 23“. This report aims to gauge the adoption of cryptocurrencies by institutional investors, track evolving trends, and understand the needs and challenges facing new market entrants in this sector.

The survey was conducted just before the strong crypto market rally in November 2023. It involved a deep dive with traditional investors who have an average of over 10 years of institutional investment experience.

The 150+ survey respondents included Sygnum’s institutional clients, equity investors, and a variety of investment professionals from banks, hedge funds, family offices, DLT foundations, funds, and asset managers. The survey was anonymous and invitation-only, specifically targeting institutional investors and excluding retail investors.

60% of institutional investors are bullish on crypto

The key findings of the survey available in Sygnum’s “Future Finance 23” include:

Increased Investment: About 40% of institutional investors, who initially planned to invest in the first half of 2024, may have contributed to the crypto market rally in the fourth quarter of 2023, possibly in anticipation of the expected Blackrock ETF.

Bullish Outlook: A significant majority, 60%, of institutional investors are bullish on cryptocurrencies, viewing them as an opportunity to capitalize on expected market gains. They also see crypto as a “safe haven” strategy for hedging against traditional markets.

Preference for Established Tokens: The survey indicates a strong preference for single token exposure, with established cryptocurrencies like Bitcoin and Ethereum being favored for their potential to generate alpha.

Rising Interest in Tokenised Real Estate: There’s an emerging trend showing a higher demand for tokenised real estate compared to venture capital investments, and art and collectibles.

Lucas Schweiger, the Digital Asset Research Manager at Sygnum and author of the report, notes that institutional investors have gradually shifted from skepticism to strong support for cryptocurrencies. “As the crypto industry has evolved, many institutional investors have also evolved from skeptics to evangelists, with over 80% now agreeing that crypto has an important role to play in the global financial industry. It’s now truly becoming a trusted gateway that is rapidly transforming the economic landscape.”

Fabian Dori, Chief Asset Management Officer and Sygnum Group Deputy CEO, highlighted how most institutional investors believe that regulation is crucial for building trust. “Over 85% of institutional crypto investors in our study believe that being regulated is essential to building trust. This is further confirmation that Sygnum’s founding strategy to be fully regulated from day one in all our regions was the right one.”

Sygnum Bank is a crypto-specialist bank regulated by the Swiss Financial Market Supervisory Authority (FINMA) and offers several digital asset solutions for institutions, including custody, brokerage, tokenization, asset management, lending, and B2B banking.

The bank raised $90 million to enhance FINMA-regulated access to DeFi. The fundraiser has valued the company at $800 million and fueled the firm’s expansion plans as it enters new markets and co-develops innovative solutions with strategic investors.

Sygnum recently reached the milestones of USD 2 billion AUM and over 1,000 global clients as it enters new international markets and co-develops solutions with strategic investors.

How to estimate economic value of crypto

To help institutions better understand the value behind each crypto asset, Sygnum Bank AG published the “Valuing Crypto Assets” report in July.

The report contains an institutional-grade methodology, enabled by growing asset-class maturity, that can act as a guide for smart, early money into crypto asset investments.

Sygnum’s report is divided into 5 parts, covering how to assess crypto asset growth and early-stage transformational technologies, as well as valuing cryptocurrencies by matching methodology with the right token type. The document also covers valuation frameworks for decentralised applications, NFTs, and other tokens including stablecoins, tokenized assets, and private corporation tokens.

The bank’s investment research is focused on a six-step strategy that enables institutional investors to better asses potential crypto-asset growth. Strategies covered in depth include market-sizing methodologies, sector trend monitoring, project data and community engagement tracking, qualitative factors and analysis of protocol and application development trends.

The report’s deep dive into institutional-grade frameworks for the valuation of cryptocurrencies identifies five core crypto asset value drivers: intrinsic value, security, governance rights, utility, and memetics. Both market-tested and innovative emerging valuation methodologies are analyzed with ideal use cases and weaknesses presented in a balanced context.