Bitwise Survey: Financial Advisors Expecting Bitcoin To Hit $100k By 2025 Increases By 275%

Bitwise Survey: Financial Advisors Expecting Bitcoin To Hit $100,000 By 2025 Increases By 275%

Over 17% of financial advisors with no crypto investments say their clients will definitely (2%) or probably (15%) invest in digital coins in the coming year.

According to a Bitwise Invest and ETF Trends report, “Benchmark Survey of Financial Advisor Attitudes Toward Crypto assets 2021,” there is a rising interest in cryptocurrencies this year from financial advisors and their clients. In December 2020, the survey was completed by nearly 1000 eligible respondents ranging from independent registered investment advisors (RIAs), broker-dealer representatives, financial planners, and wirehouse representatives.

The 300%+ spike in Bitcoin price to new all-time highs caused a spike in the number of retail and institutional investors willing to take up crypto in their portfolio. The current number of advisors allocating their clients’ funds in crypto rose over 49% in 2020, from 6.3% to 9.8% this year.

17% of financial advisors who have never invested in crypto before are looking at getting into digital assets – 15% of them “probably” and 2% “definitely” allocating funds to crypto in 2021.

The biggest motivation for financial advisors to add cryptocurrencies in their portfolio is the low correlation these digital assets have to other assets – helping in diversification. Over 54% of the advisors stated this as the main reason to invest in cryptocurrency. A further 25% chose hedging of inflation as their reason to invest in cryptocurrencies in 2021, up from 9% in 2020.

The surveyed financial advisors also said they were facing a significant uptick in client questions on the crypto space. Over 80% of the financial advisors stated they had received a question from clients on the crypto space in the past year, increasing from 76% last year.

According to the survey, nearly 75% of the financial advisors thought their clients could be investing in crypto outside of their relationship – 36% stating some or all of their clients were investing in crypto alone and 38% reporting they didn’t know if they were investing or not. Only 26% of the surveyed financial advisors stated they were confident that their clients were not investing in crypto, dropping from 28% in 2020 and 35% in 2019.

The financial advisors are also increasingly getting massively bullish on Bitcoin’s price in the coming year as 15% of them expect BTC to hit $100,000 in the next five years. This represents a 275% increase from the 4% recorded last year. Notwithstanding, the number of advisors that expect the price of Bitcoin to plummet to zero in the same timeframe has significantly dropped from 8% to 4% in the past year.

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Author: Lujan Odera

Financial Firms & Law Enforcement Find Cryptocurrencies More Risky Than Opportunistic: Survey

Financial firms, government, and the private sector all see cryptocurrencies as risky, found a survey by the Royal United Services Institute think-tank and the Association of Anti-Money Laundering Specialists on Tuesday.

About 60% of respondents said cryptocurrencies were a risk rather than an opportunity with illicit usage the main concern.

The survey that maps out mainstream global views towards cryptos suggests an uphill struggle for the industry to achieve wider acceptance. Countries across the world are still grappling with how to regulate cryptocurrencies with the EU planning to introduce new rules by 2024.

The survey was based on over 550 responses from law enforcement, financial watchdogs, financial institutions, and legal and insurance firms along with the cryptocurrency industry.

Nearly 90% of respondents from financial firms said they were worried about digital currencies being used to launder money, while more than 80% are concerned about their usage to circumvent the financial system.

“All respondents accept that cryptocurrencies are vulnerable to criminals,” the survey’s authors said.

While the mainstream views about crypto are still marred by the potential criminal usage of crypto, according to blockchain analysis from Chainalysis, it is as low as 1% of all transactions. Not to forget the fact that major banks, including JP Morgan just recently, in one of its many over the years, have been involved in the illicit usage of trillion dollars and precious metal manipulation.

Only a fifth of respondents said they viewed cryptocurrencies as an opportunity, with one of the potential benefits cited was the extended access to financial services, the research found.

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Author: AnTy

Survey Suggest 40% of Yield Farmers Can’t Read Smart Contracts; Still Pulling 500% Returns

A recent survey from Coingecko revealed that almost half of the DeFi yield farmers couldn’t read the smart contracts of the project they join. A majority of these yield farmers depend on auditors to monitor the security aspects of the project.

The survey revealed that 40% of the yield farmers could not read the smart contracts of the project they joined in; the report also revealed that the defi yield farming is dominated by males with 90% representation. It further showed that despite these yield farmers not able to read or understand the project, they still managed to make hefty profits; in fact, 90% of the respondents said that they had made a 500% return or more.

Yield Farming Dominated By Limited Users

The Coingecko survey found 1,347 respondents, out of which only a minor 23% of the respondents had participated in some of the yield farming, despite more than 80% being aware of the trend.

However, the most surprising aspect of the survey was that almost half of the respondents never read the code or researched about the projects they were participating in. This is extremely troubling, given the hype around the defi space. This trend could lead to a number of major scams arising; similar to the ICO era of 2017.

Coingecko, in its statement, noted that,

“All farmers should conduct their research before farming in any pools, as there are more copy-paste yield farming tokens that could potentially expose them to a greater risk such as code vulnerability or scams.”

Decentralized Finance (DeFi) has been the trend of the crypto town in 2020, where its market cap grew from a few million to over $15 billion in just nine months, and more defi projects have debuted given the rising hype around the space. People joining the hype wagon is understandable, but one should be aware of the risk factor involved. In fact, in the past couple of months, many meme defi projects have launched, managed to raise millions, see it’s market cap grow into billions, and make an exit scam.

All this happened in a matter of a few days.

The Coingecko survey report suggested that astonishing returns like the current times might fade away from the defi space as the hype fades out, but some projects would still allow for it to garner attention.

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Author: Rebecca Asseh

FCA Survey Estimates 1.9 Million People Currently Own Cryptocurrencies in the UK

According to a recent survey by the Financial Conduct Authority (FCA), which is working with the Government and the Bank of England, as part of a UK Cryptoassets Taskforce, more and more people are now aware of cryptos and getting into them. The survey states,

“We estimate 3.86% of the general population currently own cryptocurrencies. This amounts to approximately 1.9 million adults with the UK population (over 18) taken to be approximately 50 million.”

It is also estimated that 5.35% (2.6 million people) hold or held cryptocurrencies, up from 3% (1.5 million people) in 2019.

In this latest survey, 73% of adults compared to 42% last year have found to be heard of cryptos. Traditional media and online news are playing a part in this awareness with 28% of adults that were aware of cryptocurrencies had seen an advert.

Meanwhile, 45% of crypto owners have also seen a related advert and 35% of them said it made the purchase more likely. But those influenced were also more likely to subsequently regret the purchase. Crypto owners also understand the risks associated with the lack of protections, but the agency still states,

“the lack of such knowledge among some presents potential consumer harm to consumers.”

Bitcoin & Libra is all we know about

The research was conducted by FCA from 13 to 21 December 2019, with a nationally representative online panel of 3,085 respondents. After screening out those who haven’t heard about crypto, the agency added 483 individuals to the sample who were crypto owners for the “longer questionnaire.”

These crypto owners have a high technical knowledge and it has been found that 75% of them hold under £1,000, roughly $1,230, and half of them hold under £260, nearly $320.

Bitcoin remains the most recognized crypto while Libra, which doesn’t exist yet, 22% had heard about this upcoming stablecoin from Facebook.

Testing the knowledge of cryptocurrency owners it was found 90% conducted some research before purchasing cryptocurrencies, compared to 84% in 2019.

Speculation, Regulation, & Coinbase Domination

The most popular reason for buying cryptos remains speculation – ‘as a gamble that could make or lose money’ rather than as an investment of money.

Those investing for speculation purposes were also more likely to hold their cryptocurrencies for more extended periods. In comparison, those displaying a lack of basic knowledge tend to hold their cryptocurrencies for shorter periods.

While 12% never monitor the value of their holdings, 15% regret having purchased.

Almost 50% of cryptocurrency owners have never used digital assets, but a good 27% did use them to purchase goods and services.

Moreover, 31% of respondents who currently own crypto currently do not intend to purchase more crypto because they consider it too risky. 29% of these will buy more if it is regulated in the future.

Interestingly, 73.2% of consumers that do not currently own but plan to purchase cryptocurrencies in the future reported that the lack of regulatory protection has impacted their decision not to buy cryptocurrencies to date.

Unlike the previous times, this survey found that 8% of respondents used borrowed money to purchase cryptos. But these borrowers were most likely to be the ones displaying a lack of knowledge surrounding the technology underpinning cryptocurrencies or the absence of regulatory protections.

The crypto purchases were made majorly (83%) using only non-UK based exchange, with Coinbase being the most popular one with 63% followed by Binance (15%), Kraken (10%), Bittrex (8%), and Bitfinex (7%).

Also, a good 46% store their crypto on the exchange where they bought it, and only 24% keep it in on offline hardware.

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Author: AnTy

36% of Big Institutional Investors Own Digital Assets While 80% Find them Appealing: Fidelity

36% of large institutional investors own digital assets such as Bitcoin, according to a survey from Fidelity Investments which also runs a service that trades and secures digital assets. Tom Jessop, president of Fidelity Digital Assets said,

“These results confirm a trend we are seeing in the market towards greater interest in and acceptance of digital assets as a new investable asset class.

This is evident in the evolving composition of our client pipeline, which spans from crypto native funds to pensions.”

Investors in Europe are more likely to own digital assets

Across the US and Europe, a third of the survey’s 774 respondents said they own cryptocurrencies or derivatives. In Europe, 45% of institutions — including pension funds, investment advisers, family offices, and hedge funds are invested in digital assets.

In the US, only 27% of the surveyed 393 institutions said they own digital assets. Interestingly, 59% of these US investors are invested directly and only 22% have done so via futures. Although just over half of Europe’s, interest investors in the US has increased from 22% a year ago. “Europe is perhaps more supportive and accommodating,” said Jessop which could

“be just things going on in Europe right now, you got negative interest rates in many countries. Bitcoin may look more attractive because there are other assets that aren’t paying return.”

Bitcoin continues to be the digital asset of choice

The survey was conducted by Greenwich Associates between November 2019 and early March, right before the market crashed.

Over a quarter of the respondents hold Bitcoin while only 11% are holding Ether. In 2020 so far, Bitcoin is up 32% while Ethereum has gained 86%. After tumbling during the COVID-10 pandemic triggered sell-off, crypto assets have rallied.

Besides price, the survey also noticed that over the last year, there have been incumbent service providers and increasing coverage by the mainstream financial firms, all of which contribute to the upward trend seen in institutional investors’ digital asset ownership.

Volatility the main concern impeding adoption

There is still a lot of scope for growth here as almost 80% of investors surveyed find something appealing about the asset class.

Interestingly, while 25% of European investors find the fact that certain digital assets are free from government intervention to be appealing, only 10% of investors in the U.S. feel this way.

91% of those open to exposure to digital assets in the next five years expect to have at least 0.5% of their portfolio allocated to them.

The majority of institutional investors feel digital assets have a place in their portfolio while 40% believe it to be an alternative asset class and 20% as an independent asset class.

The survey found that price volatility was the top concern followed by market manipulation and lack of fundamentals to gauge appropriate value hindering digital assets’ wider institutional adoption.

But according to Jessop, these issuers are largely those that will “resolve themselves as the market infrastructure evolves.”

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Author: AnTy

Family Offices and HNWI Dominate Crypto Hedge Fund Industry, Which Doubled in 2019

According to a new survey from PwC and Elwood Asset Management Services Ltd., an investment firm specializing in digital assets, crypto-focused hedge funds’ assets under management (AUM) spike in 2019.

The total AUM of these cryptocurrency-focused hedge funds doubled last year, rising from $1 billion in 2018 to over $2 billion in 2019.

The average per fund also jumped from $21.9 million to $44 million, reported Bloomberg.

2019 was the year the price of bitcoin surged upward 95%. Ending 2018 at about $3,850, BTC price soared to a high of $13,900 in 2019 only to end the year at nearly $7,200.

“The volatility of crypto markets offers many opportunities for quant traders,” said Henri Arslanian, PwC global crypto leader, and partner.

“The performance of crypto quant funds tends to be more linked with market volatility rather than market performance.”

Crypto Hedge Fund Industry to Grow Significantly, Litecoin top Traded Altcoin

Out of these finds, discretionary long-only funds had the best median performance of 40% with average gains of 42%. Discretionary long and short had both an average and median advance of 33%.

Quantitative funds saw an average gain of 58% and a median increase of 30%, the difference between the two figures implies there were some outsized outperformers. Multi-strategy funds saw a median increase of 15%.

When it comes to investors of these hedge funds, Family offices lead with 48% share followed by high-net-worth individuals (HNWI) at 42%.

Venture-capital funds or funds-of-funds and foundations or endowments accounted for only a few percent. However, none of the respondents cited pension funds. Arslanian said:

“I expect the crypto hedge fund industry to grow significantly over the coming years as investing in a crypto fund may be the easiest and most familiar entry point for many institutional investors looking at entering this space.”

As we reported, Grayscale had a record quarter first of 2020, despite the bitcoin price crash by about 50% in a day in line with stock markets triggered by coronavirus fear, dominated by hedge funds.

Last week, Paul Tudor Jones announced that he is buying bitcoin, calling it a hedge against inflation. He also said his fund could allocate to bitcoin futures.

Before that, $75 billion hedge fund Renaissance Technologies said its Medallion Fund is “permitted to enter into bitcoin futures transactions.”

According to the survey, 97% of the respondents traded Bitcoin (BTC), 67% Ether (ETH), 38% XRP, Litecoin (LTC), 31% Bitcoin Cash (BCH), and 25% EOS. The report said,

“It is interesting to note that Litecoin was mentioned by funds as one of their top traded altcoins despite its market cap being relatively smaller than the other mentioned altcoins.”

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Author: AnTy

Economist Survey Suggests Users Trust CBDC’s (54%) Twice As Much As Private Crypto’s (26%)

A recent survey conducted on crypto assets and investment by Crypto.com and The Economist saw participation from over 3,000 users.

The survey shed some interesting light on how the general public perceives cryptocurrencies. The most surprising part was that the majority of those surveyed expressed far more interest and confidence in Central Bank Issued Digital Currencies than more popular decentralized crypto assets.

The survey revealed:

  • 38% of the people did not consider decentralized crypto as a safe investment against
  • 26% of people who believed that decentralized crypto tokens are a safe form of investments while
  • 25% of those surveyed were in the middle and the remaining
  • 11% had no idea whether they are safe or not.

On the other hand, 54% of the surveyed people showed trust in CBDC and believed that a token issued by their government or central bank would be a more secure form of investment, while 14% believed CBDCs are not that safe. 23% of the correspondent was in-between and the remaining 9% had no idea.

Use-frequency-for-payment-methods
Source: Economist

Why People Trust CBDCs More than Decentralized Currency?

Survey respondent rating of trustworthiness

The cryptocurrency space emerged with the launch of Bitcoin after the financial crisis of 2008/9. It only gained the attention of the large public after the massive rise in 2017.

At the same time, Bitcoin and cryptocurrencies received a lot of negative press, perpetuated by central banks, commercial banks and even governments who called it a mere internet bubble.

However, in the following years, these critics realized that cryptocurrencies, like any other new asset, are volatile and not just an internet bubble and thus a lot of them changed their stance including governments.

These cryptocurrencies have been advertised as an alternative form of currency by many proponents. But because of their high volatility (which has come down significantly) it still cannot be used as a direct form of exchange.

Thus a majority of the people use it as an instrument for investment diversification. Along with the volatility issues, and passive regulatory stances of governments, even in developed nations, it makes it tough for the common public to look at it as a safe bet.

The lack of knowledge among the broader public, whose only aim is to see Bitcoin rise to 2017 level highs as a quick profit maker, in addition to evolving scams involving crypto, wreaks havoc on the underlying trust in digital asset classes.

On the other hand, Central Bank Issued Digital Currencies (CBDC or DC/EP) offer that sense of security that at least their asset won’t be under the scanner of authorities.

Apart from that CBDCs are basically digitized fiat that runs on the common credit system of the country and thus people won’t have to worry about high volatility or their investment getting to zero.

Apart from that, a majority of the countries are looking to launch their own CBDCs. China currently at the top, having already started trials for its national digitized yuan. Other countries, meanwhile, have either started research for the same or are looking to study the pros and cons of launching CBDCs.

The Rate of Crypto Adoption in Developed Nations Are High

The survey found that there is a 20% deviation in the rate of adoption between developed and developing nations. Meaning that the chances of consumers in developed nations of adopting crypto was 20% higher than developing nations.

The survey revealed that 23% of the surveyed consumers in developed nations owned cryptocurrencies, while only 19% of people in developing nations had already invested in digital assets.

The study also revealed that 60% of crypto owners were aged between 18 and 38 years old while only 40% above 39 years owned crypto.

Digital Currency Survey By Economist.com

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Author: Rebecca Asseh

Crypto Related Losses Skyrocket Despite Hacking Crimes Dropping Significantly

  • According to a Q4, 2019 survey by CipherTrace users have lost 4.5 billion in Ponzi scheme and fraud scams while hacking-related scams have significantly dropped
  • Banks have also fallen prey as US banks unsuspectingly facilitate illegal transactions

Losses in 2019 shot up by 160% despite hacking crimes dropping by 66%, this was according to a 2019 Q4 report by CipherTrace, a cryptocurrency intelligence firm. Amounting to $4.5 million just in the previous year.

Dave Jevans, CipherTrace CEO, stated they had seen a major bump in crimes where the unsuspecting users were duped by Ponzi schemes, mainly set up by people inside the system. This would make investors pull the plug on the cryptocurrency investments that are hurting the systems built around digital assets.

“We noticed a significant uptick in malicious insiders scamming unsuspecting victims or leaching on their users through Ponzi schemes.”

A common use case is the crypto wallet and exchange PlusToken Ponzi scheme where unsuspecting clients lost $3 billion in a single scam. There has also been the Canadian Exchange, QuadrigaCX, clients lost close to $135 million after the founder of the company passed away suddenly.

Banks are Unsuspecting perpetrators

Banks have also been victims as they have unknowingly facilitated illegal cryptocurrency transactions of up to $2 billion in US banks alone. This could be mainly attributed to the fact that it has become harder for traditional financial systems to embrace emerging technology while steering clear of crypto relations. This is as banks globally continue to face fines levied by Anti-money laundering (AML) authorities of about $6.2 billion.

Jevans further explained that banks need to come up with alternative solutions of ridding their systems of illegal dealings that would finance terrorism as they had previously underestimated the percentage of digital assets that are to be found in their accounts and systems.

“Like them or not, banks have a lot more virtual assets lurking in their accounts and payment networks than most in the industry had previously thought.

Banks need new capabilities to ferret out illicit MSBs [Money Service Businesses], terrorist financing, and other major sources of risk.”

Illegal crypto merchants have also been key in funneling funds to terrorist fronts. They are usually connected to high-risk exchanges and hide the transactions by intentionally using the wrong merchant category codes (MCC) the report further read.

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Author: Lujan Odera

BIS Survey Reveals CBDC’s Are Moving From ‘Conceptual’ To ‘Intensive Practical Development’

The Bank of International Settlements (BIS) conducted a survey, showing roughly ten percent of central banks are expected to issue a Central Bank Digital Currency in the near future.

The BIS report was released on January 23 and presented the results from a survey conducted on 66 central banks from all over the world, investigations on how eager these banks are to create a CBDC.

The results were, as shown above, were that only ten percent of these surveyed banks are interested in developing and issuing a central bank digital currency anytime soon, which is twice more than last year. 20% of them said they’re likely to have their own CBDC at some point in the future, just not in the near future.

2020 BIS CBDC Survey

2020 BIS CBDC Survey

What Could Motivate Central Banks to Issue CBDCs?

BIS CBDC Motivations

BIS CBDC Motivations

The participants in the study represented 45 emerging market economies (EMEs) and 21 advanced ones. The EME banks were more motivated to develop an all-purpose CBDC, as this could bring increased domestic payment efficiency, financial inclusion and safer payment. Advanced economies said the safety of payments would be the only reason for them to develop a CBDC.

Both categories showed the same paths when it comes to a wholesale CBDC, EMEs being interested in an all-purpose CBDC too. Advanced economies were also motivated by the increased efficiency of international payments brought on by a CBDC.

BIS CBDC Motivations Wholesale

BIS CBDC Motivations Wholesale

CBDCs Being More Understood as a Result of Joint Efforts

(WEF) World Economic Forum and some of the major central banks this week, came up with a CBDC policy maker toolkit to help policymakers understand the advantages of CDBCs. For the development of the framework, WEF worked with central bank researchers, regulators and experts from more than 40 institutions.

The framework recognizes how a CBDC increases the speed and efficiency of international interbank payments, while the costs, the counterparty and settlement risks are being reduced.

Also on January 22, Facebook’s Libra has helped in pushing central banks to give more consideration to CBDC’s, stated a previous head of payments and settlements at the Bank of Japan.

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Author: Oana Ularu

38% of Asset Managers with State Street Plan to Invest in Crypto Next Year

  • The survey of State Street’s asset managers was conducted by Oxford Economics, though the firm requested this research.
  • Approximately 94% of State Street’s clients already hold digital assets and related products.

While Bitcoin used to be an asset that investors stayed away from, many asset managers are considering adding it to their own portfolios nowadays. In a statement by the managing director of digital product development and innovation at State Street, Jay Biancamano, it looks like next year could be lucrative for the crypto market, but none of the asset managers have pushed for the storage of crypto yet.

Biancamano stated, “We’re talking to them less about ‘Can you custody this,’ and more about how we can work together to make sure these changes aren’t disruptive to our business models.” During a bank-sponsored event on Thursday in New York, he added that there will be a clearer idea of what the financial institution plans to do with these assets and their custody next year. Once establishing that custody, State Street will be looking into fund administration, private placements, and the trading and issuance for this sector.

Even without much interest in the custody of crypto, clients of the bank are seemingly investing more of their own funds in the asset class. A survey conducted by Oxford Economics, at the request of State Street, found that digital assets and related products are already held by 94% of their clients. In 2020, the bank expects to discover that over a third of the clients plan to increase their allocation of digital assets, though just under half stated that their allocation would remain unchanged.

The interest in digital assets by State Street comes at a time that the bank is working to reduce plumping with distributed ledger technology, suggesting that Wall Street is giving up their push for “blockchain, not bitcoin.” The bank was forced to lay off over 100 blockchain developers this year, though Biancamano’s team’s responsibilities were independent of the developer team.

Biancamano stated, “Being able to provide custody and servicing around digital assets is different than building our entire backend infrastructure and prioritizing our technology stack to support Hyperledger blockchain.” He called these two endeavors “parallel paths,” adding that the company still has the ability to go into the sector without employing DLT engineers. While State Street still has the expertise of this sector within their staff, more of the focus will be “on the digital asset piece.”

The sample of asset managers in the survey included 101 clients, also finding that 62% believed that risk management could be improved with tokenization, and just over half of responded believed it would improve security. Only one-third of the clients expressed that it would increase liquidity or create democracy in investing for retail investors.

The clients of State Street seem to have a more bullish perspective on DLT than the actual company, as over half of the respondents stated that they’ll add the tech to their trading process in the next year. Only half of the same group made the same statements about artificial intelligence. Furthermore, the majority of clients (65%) agreed that financing products could be improved with the use of DLT.

These investors appear fairly confident in the changes that they expect to see from the market overall, as just under half of the respondents showed faith in the approval of a Bitcoin ETF by regulators in 2020. Biancamano added, “Honestly, institutions already have the ability to invest in these funds. VanEck is doing a private placement. WisdomTree announced the ability to invest on the Swiss exchange. I would like to see regulators become more comfortable with a bitcoin ETF… but I think the ability to invest in bitcoin in a fund or directly is there.”

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Author: Krystle M