A majority (95.7%) of the 208 institutional investors surveyed by Binance plan to either increase or maintain their crypto allocation over the next 12 months amid a positive outlook for the industry. 63.5% of investors said they were positive about crypto’s future during the period.
In addition, 50% of respondents plan to increase digital assets holdings over the next 12 months. Another 45.7% of investors expect to keep their allocations unchanged during the period. Only 4.3% of respondents expect to cut their crypto allocation over the next year, the survey indicates.
The bullish data sits in contrast with the past 12 tumultuous months, with 17.3% of investors slashing their crypto allocation following the string of high-profile bankruptcies last year. Nevertheless, institutional investor sentiment remained generally strong, with 47.1% and 35.6% of investors maintaining and increasing allocation, respectively, during the period.
Investors are more hopeful about crypto’s outlook over the long term. 88% of investors said they are positive about crypto’s future over the next decade as the asset class is expected to be regulated across major economies. Only 2.4% of investors had a negative crypto outlook over the period, while 9.6% of respondents took a neutral stance.
Furthermore, the survey indicates that the perception of institutional investors towards crypto has remained largely unchanged over the past 12 months. However, more investors have become positive about Bitcoin. Around 47.3% of investors have a strong perception of Bitcoin compared to 33.2% a year ago.
Binance noted in the survey,
“This [improvement in the perception of Bitcoin] may be due to recent market developments, technological innovations in the Bitcoin ecosystem, or perhaps stronger conviction in Bitcoin’s narrative as digital gold amidst an uncertain macro environment.”
Institutional investors use CEXs
The majority of institutional investors — 90.5% — use centralized exchanges (CEX) to execute their trades, and only 5.2% said they use decentralized exchanges (DEX). When it comes to the custody of their assets, 58.2% of respondents said they prefer CEXs, while 20.2% prefer institutional custodians.
Investors primarily select CEXs through an evaluation on the basis of liquidity, security, and reputation, the survey shows.
Furthermore, 42.8% of institutional investors listed the potential return on investment as their primary motivation for crypto investment. Another 37.5% said they invest in crypto to get exposure to emerging technologies.
Around 54% of respondents noted crypto infrastructure as the focus of investment for their funds. Additionally, over 40% of investors are focusing on either Layer 1 or Layer 2 technologies.
Regulatory risk remains a prime area of concern among investors, the survey shows. 29.7% of respondents said they were concerned about regulatory risk, while 21.6% were worried about counterparty risk. Another 15.7% of respondents said they have concerns related to custody risks.
Institutional investors believe that crypto adoption is being driven by factors other than price movements. Over 25% of investors said increasing real-world use cases and regulatory clarity is driving adoption.
Binance is building for the future.
Building on its first-party research, Binance is investing in the integration of other emerging technologies into its business, aligning with the institutional preference for innovative technologies and the use of centralized exchanges.
Binance said it is evolving for the future by making its systems faster and more secure by integrating technologies such as machine learning (ML) and artificial intelligence (AI) in a document shared with CryptoSlate,
For instance, Binance has used ML to detect suspicious language in peer-to-peer communications. The exchange has also strengthened its user verification process by integrating AI to verify documents and videos during the know-your-customer (KYC) process.
More importantly, for investors, Binance has made its transactions between 5 to 50 times faster, depending on which accounts the system is handling. It has also increased the capacity of its futures matching machine by 50% to boost transaction throughput.
Since the start of the year, the exchange has deployed 200 updates to increase the platform’s efficiency and ease of use, the document noted.
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