New research has revealed that institutional investors look set to concentrate on crypto to beat equity and fixed income issues, according to the latest reports.
The data, gathered from the market-leading digital institutional investment platform VALK, reveals professional investors are favouring cryptocurrency and digital assets as concerns regarding stretched equity valuations and poor yields in the fixed income markets grow.
Its study, which focussed on professional investors working in eight major economies for institutions holding more than US$1trn in assets under management in total, discovered that 33% have invested in crypto assets for the first time recently while 55% have increased their allocation to crypto.
The majority of the investors surveyed in Europe, UK, Hong Kong, Singapore, Australia, and Brazil predict the robust performance of crypto asset class during the COVID-19 crisis has transformed institutional views on the sector. An unprecedented 53% said that digital assets are a viable asset class.
VALK has developed a unique Aggregator portfolio management system that enables institutions to manage their Decentralised Finance (DeFi) portfolio on one interface on a smart account. The solution is due for launch in early 2022 and reveals institutions have concerns about equity valuations and fixed income yields.
The company enjoys a strong market position with a high degree of trust from industry leaders and has won awards for its first technology solution which enables clients including investment banks, hedge funds, family offices, fund managers, and asset managers to digitise processes and assets to become more profitable and target new opportunities through secondary trading and access to exchanges.
A rise in crypto investment
Globally, more and more institutions have been stepping into DeFi and experimenting with cryptocurrencies. Since El Salvador's adoption of Bitcoin as a legitimate currency in June 2021, more confidence from investors has been seen in the marketplace.
VALK’S research bore out these findings, showing that the institutional sector is showing strong support for digital currencies, with 54% believing the total market capitalisation of cryptocurrencies will grow to $3trn and more by the end of 2023. The data also predicts that by 2025, 46% of all investors see the total market capitalisation as being larger than $6trn.
New predictive technology for investors
VALK’s platform creates pools that operate as a non-custodial portfolio management system for digital asset managers and funds. The solution is an API for all protocols, and connects financial institutions to all crypto markets, enabling them to utilise a number of yield-generating strategies.
The company will also launch another tool called MERLIN, a DeFi smart wallet that allows investors to monitor their DeFi positions.
MERLIN is Integrated with Compound and Aave so that customers will be able to connect their wallets using Metamask or just by pasting their address. The tool will address one of the main barriers stopping institutional access to DeFi, which is the challenge in handling portfolios over several protocols.
Speaking about VALK’S findings, and the launch of their new tools and solutions, Antoine Loth of VALK, explained, “The institutional investment switch to crypto and digital assets is well underway and the research highlights that with a third making their first investment recently.
“It’s a similar story in the wider DeFi market institutions increasingly dominating transactions with recent data** showing they accounted for 60% of all transactions in the sector in the second quarter of 2021.
Loth added, “VALK’s aggregator is ideally suited to serve the growing institutional interest and bridges the gap between traditional financial institutions and DeFi, by solving current issues in the industry, including the regulatory landscape and security concerns surrounding DeFi.”