Study Reveals Up To 94% Of Institutional Endowment Funds Invested In Crypto
A recent study has shown that up to 94 percent of endowments in 2018 allocated funds to investments in the crypto space.
The survey, which was published on April 12, covered the fourth quarter of last year. Crypto custody provider BitGo partnered The Trade Crypto and Global Custodian on the study.
The report states that of 150 endowments that participated in the survey, around 89 percent of them were U.S.-based. The remaining respondents were from the U.K. and Canada.
The wider crypto market continues to grapple with issues like lack of proper regulatory frameworks, custody solutions and liquidity. But that aside, the study reveals that most of the endowments reached have indicated a readiness to allocate more investment resources to crypto-related projects.
Of all the respondents, only 7 percent said there might be a reason to cut on their investment allocations for the year.
The results of this survey provide a key pointer to what many in the crypto space have called the important moment when institutional investors make their grand entry.
Per Jonathan Watkins, the managing editor at Global and The Trade, the last 18 months may have been about the big-money comes to crypto.
Yet, he opines, that institutional investors “already arrived,” doing so via endowment funds.
Notably, 54 percent of surveyed institutions said they have been investing directly in cryptocurrency. The remaining 46 percent indicated that their investments are in a variety of crypto funds.
Over half of the endowments have noted that they will over the next one year invest more in crypto initiatives.
And in what could bring even more investments to the crypto scene, 45 percent anticipate that current allocations will be rolled over to investments made over 2019.
The study notes that endowments are interested in three key characteristics when choosing between crypto funds: the funds must be regulatory compliant, have enough capital flows and liquidity. They must also be able to guarantee user account security.
According to The Trade, there is a guarded optimism within the sector with regard to the investors’ sentiment towards the emerging asset class. For many within the institutional investor industry, cryptocurrency’s prospect as an investment vehicle is very bright.
The publication also notes that current categorizations of crypto investing as a wild endeavor are wide off the mark.
One of the latest endowment funds to invest in cryptocurrency is that of the University of Michigan. The institution announced this February that it would be committing more of its $12-billion fund to an earlier investment it put in Andreessen Horowitz’ crypto fund.
There have been other reported investments in crypto fund involving Ivy League giants Yale, Harvard and the Massachusetts Institute of Technology (MIT). These reports came to the fore towards the end of 2018, with Harvard’s reported $39.2-billion fund the largest of any university at the time.
Other top institutions reportedly looking to invest in crypto funds are Dartmouth College, Stanford University, and the University of North Carolina.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.