Aggressive institutional investors pushing into digital assets set to replace retail players

Institutional investors are set to replace retail investors as the major holders of digital assets in 2023, according to new research shared with City A.M. today.

More than 7 out of 10 of professional investors believe institutions will hold 60 per cent of digital assets within seven years, reversing the current status where institutions hold around 3 per cent of digital assets and retail investors 97 per cent.

The research by Grayscale Investments, among professional investors who control $182.5bn assets under management, found almost total agreement that institutions will replace retail investors as the main holders of digital assets – only 4 per cent said it will never happen.

Institutional interest is being driven by a range of factors, the research found, but key drivers include hardware providers such as Canaan which supplies servers and processors for digital mining being able to expand into cloud computing capital expenditure.

Around three-quarters of investors believe hardware providers will take a bigger share of the predicted $55bn spending beyond the digital asset mining industry.

They also believe the digital payment platform sector will grow strongly – on-chain payment volumes reached $25 trillion across stablecoins, Bitcoin, and Ethereum last year but 70 per cent of investors believe they will be worth $30 trillion or more by 2030.

One in three (32 per cent) believe it will be worth more than $40 trillion – more than the credit card sector.