Institutions Hold Ground on Crypto Despite Market Crash

Institutional investors showed resilience in the face of market volatility during late March and April. According to a report by Bitwise, none of the 15 institutions interviewed reduced their cryptocurrency allocations despite a significant market decline.

Several participants even increased their holdings, while some institutions that had not yet invested were progressing through internal due-diligence processes. One sovereign investor told Bitwise that establishing the legal and regulatory infrastructure required for a cryptocurrency allocation could take more than a year.

The institutions also differed considerably in the size of their crypto allocations. Allocations among the interviewed investors ranged from 0.5% to 13% of investable assets, with most falling between 1% and 2%. Family offices generally reported larger allocations and could sometimes make investment decisions with approval from a single principal.

BTC remained the primary institutional choice, and nearly every institution interviewed either used spot cryptocurrency exchange-traded funds or planned to use them. These products were seen as providing simpler administration and lower costs compared with managing cryptocurrency directly.

The report pointed to publicly disclosed holdings involving two Abu Dhabi investment vehicles as an example of institutional exposure already in place. Together, the two vehicles held nearly $764 million worth of BlackRock Bitcoin ETF shares at the end of June, according to the report.