Is Now the Time for Institutional Crypto Investors?
Inflation figures are higher than they’ve been in decades, and the FTX scandal has brought a lot of negative news.
Inflation figures are higher than they’ve been in decades, and the FTX scandal has brought a lot of negative news. The result? Private investors are having a tough time in the current market. Still, institutional investors are optimistic about crypto. New studies confirm this positive outlook for the future.
Savings Rate
N26 recently conducted a survey of 380,000 customers on saving behavior in times of high inflation. It distinguished between the period before and after the war in Ukraine. The result: with an average savings rate (the share of disposable income for a household) of 4.02 percent, Germans have saved only about half as much since the start of the war in Ukraine: a drop of 52.2 percent. In Italy, the situation is even worse. The savings rate fell by more than 80 percent from the start of the year to just 0.6 percent of income.
With the introduction of the 9-euro note in June, Germans were able to save a little more again—according to the study, an average of 119 euros per month, almost 74 euros more than in May. In France, Austria, and especially Spain, people saved more than at the start of the year. The average savings rate over the entire reporting period is 6.6%, highest in Spain. In France, people saved an average of just 0.1%. Germany ranks second with 5.1%.
Nevertheless, it remains doubtful that private investors will put more money into investment products as a result. A general reluctance to buy and a greater tendency to save are plausible.
Crypto Winter: Money Into Bitcoin and Co. Keeps Flowing
As the average consumer tightens their belt, institutional investors in the crypto space appear positive about the future. As part of a study by the Coinbase exchange and Institutional Investor, 140 large U.S. investors were surveyed about their crypto holdings between September and October 2022.
According to the report, 62 percent of respondents say they bought more crypto in the last 12 months. Just over a quarter (26%) kept their holdings unchanged, while 12% sold some of their crypto.
Regulation: The Deciding Factor
According to the study, more than half of large investors plan to increase their share of wealth in cryptocurrencies over the next three years. More than a third (36 percent) say they will not change their crypto allocations. Six percent intend to reduce their percentage of wealth in bitcoin and similar assets.
More than two-thirds (71 percent) of respondents expect cryptocurrency prices to rise in the long term. About 45 percent agree with that.
From an institutional standpoint, one issue is crucial for investments: regulation. According to the survey, more than half (52 percent) of respondents say they are especially worried about the unclear regulation around crypto. It makes sense that this aspect is the most important factor for participants when choosing a partner for their crypto investments.
