What is the main fear when investing in bitcoin?

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Key facts:

Respondents are institutional investors and wealth managers in the US and Europe

The volatility of bitcoin and cryptocurrencies is the second biggest concern, at 67%.

A survey applied to institutional investors revealed that the security and custody of assets are perceived as the main obstacle to investing in bitcoin (BTC) and other cryptocurrencies in this sector. This was reported by Bloomberg this Thursday, January 6.

The study was commissioned by London-based traditional and digital investment manager Nickel Digital Asset Management. The interviews were reportedly administered to 50 institutional investors, including investment banks JP Morgan and Goldman Sachs; as well as 50 wealth managers from the United States and European countries such as the United Kingdom, Germany, France and the United Arab Emirates. The group collectively manages USD 108.4 billion in assets.

Contrary to the belief that volatility or a lack of regulatory clarity are the main fears of large investors, the results showed that 79% of those surveyed noted security as their top concern about the bitcoin and cryptocurrency market.

“Our research shows that institutional investors have correctly identified custody and security as a critical differentiator for this asset class,” said Henry Howell, Head of Business Development at Nickel Digital. In his opinion, advances in solutions for the institutional sector are encouraging more large-capital investors to expose themselves to cryptocurrencies.

However, price instability also worries the institutional sector. The investigation found that for 67% of the participants volatility is a key factor when entering the crypto-asset market. Meanwhile, 56% indicated the market capitalization and 49% the regulatory environment, as reasons not to invest.

On the other hand, the study indicates that 73% of the respondents believe that, if the SEC (Securities and Exchange Commission of the United States) is empowered to regulate cryptocurrencies, the price will be positively impacted. It should be noted that, as reported by CriptoNoticias, the president of the SEC, Gary Gensler, asked the United States Congress to grant him legal authority in the surveillance of the cryptocurrency sector.

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Institutional investment in bitcoin and other cryptocurrencies had a significant rebound in 2020 and 2021. A study published in August last year showed that the institutional sector already had almost 1.5 million BTC under its belt, a figure that represents close to 8% of the total supply of bitcoin. Block.one and MicroStrategy, the companies that own the largest amount of bitcoin, add up to more than 162 thousand BTC, acquired between 2020 and 2021.

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