- 54% of Japanese investors intend to invest in crypto within three years for diversification.
- Only 16% view cryptocurrencies as a potential substitute for base currencies.
- Major barriers include volatility, regulatory challenges, and lack of analysis methods.
A new survey by Nomura Holdings and Laser Digital Holdings reveals that 54% of Japanese institutional investors plan to enter the crypto market within the next three years, signaling a significant shift in institutional sentiment towards digital assets.
This survey included 547 investment managers from various sectors, including family offices and public interest corporations. The survey was conducted from April 15 to April 26, 2022.
Moreover, about one-quarter of the respondents expressed a positive outlook towards cryptocurrencies for the coming year. However, 23% hold an opposing view, with the remaining 52% undecided. Bitcoin and Ethereum received particularly favorable impressions among the stocks discussed.
Additionally, 62% of participants see virtual currencies as a chance to diversify their investment portfolios. They regard them as high-return investment opportunities rather than alternatives to traditional base currencies, while only 16% view them as potential substitutes for base currencies.
Besides diversification benefits, other key motivations for investing in digital currencies include their low correlation with different assets and potential as a hedge against inflation. On the allocation front, 66% of those planning to invest aim to allocate 2-5% of their assets under management to virtual currencies. Furthermore, most respondents are considering a minimum investment period of one year.
Additionally, over half of the investors are exploring opportunities in crypto-related activities such as staking, mining, and lending. Despite the interest, there are notable barriers, including the need for established methodologies for fundamental analysis and concerns about counterparty risks and high volatility.
Moreover, internal and regulatory challenges also discourage investment. The most significant hurdles cited are the need for more supportive internal infrastructures and regulatory bottlenecks. Notably, taxes and security issues are major concerns among wealthy investors.
Furthermore, while 31% prefer direct investments in digital currencies, a majority, 53%, would choose exchange-traded funds (ETFs) if they were available. Consequently, Nomura anticipates increased market activity if Japan approves the issuance and management of crypto ETFs.
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