After a prolonged downturn in 2023, the cryptocurrency market is set to rebound strongly towards the end of 2024, despite banking crises, stringent regulatory measures, and global economic instability. The Signum survey reveals a new wave of optimism among traditional financial institutions, driven by large investment inflows, the launch of spot Bitcoin exchange-traded funds (ETFs), and the development of AI and decentralized physical infrastructure (DePIN) technologies.
A survey released Thursday showed that 57% of institutions plan to increase their investments in digital assets, driven by a growing appetite for risk and greater confidence in the asset class over the long term.
The bullish outlook for the cryptocurrency market has been reinforced by the Fear and Greed Index reaching 84, indicating the dominance of extreme greed. The index, published by Alternative, reflects a rise in demand for digital assets such as Bitcoin and an increase in positive sentiment towards the market. The index’s sharp rise of four points in 24 hours indicates increased investment enthusiasm and increased trading volume. However, this excessive enthusiasm could be an indicator of potential market volatility or upcoming corrections.
Traditional investors embrace cryptocurrencies
The Signum survey, which covered a wide range of institutional investors, showed that 72% of respondents were willing to invest in digital assets. It is worth noting that traditional institutions such as asset managers and investment funds showed greater interest in digital assets compared to banks and insurance companies, which showed greater reservations.
“This survey reveals a growing appetite among traditional investors to explore investment opportunities in digital assets, with diverse strategies and a strong expectation that these assets will reshape the traditional financial system,” said Lucas Schweiger, Director of Digital Assets Research at Signum.
Increased risk appetite and diversification needs
The survey results revealed a significant increase in the risk appetite of traditional investors, with 79% of them planning to increase their investments in cryptocurrencies over the next year. This trend is attributed to the desire to diversify investment portfolios and hedge against global economic volatility.
This increase in appetite coincides with an increase in the fear and greed index in the cryptocurrency market, reflecting increased enthusiasm among investors and increased trading volume. However, high levels of greed may indicate speculative investment behavior, as the fear of missing out on profitable opportunities may push investors to make impulsive investment decisions, which can lead to sharp market volatility.
The main findings of the survey indicate that:
91% of respondents invest in leading cryptocurrencies like Bitcoin and Ethereum.
40% of respondents have investments in decentralized application (DApps) tokens, while 39% invest in NFT tokens.
Layer 1 protocols and Web 3 infrastructure are of high interest, with 76% of respondents expressing strong interest in these sectors.
Direct investments in digital tokens stand out as the most preferred cryptocurrency investment product, highlighting the strong preference for protected digital asset ownership and participation in popular yield-generating options such as staking.
Preference for established assets and stablecoins
The survey showed that the majority of investors (91%) prefer to invest in major cryptocurrencies such as Bitcoin and Ethereum, as well as promising first-layer projects such as Solana and BNP Chain. This preference is due to the stability of these assets and the support of financial institutions. Half of the participants are keen to hold stablecoins as a hedge against volatility in the crypto market, and to facilitate the entry and exit of investments. This investment behavior is consistent with the rise in the Fear and Greed Index, as investors seek to strike a balance between achieving high returns through high-risk assets and maintaining the liquidity and stability of their portfolio through stablecoins.
Impact of US Spot Bitcoin ETFs
The US regulatory approval of the launch of spot Bitcoin ETFs has given a boost to the cryptocurrency sector, with 71% of investors showing increased interest in investing in the space thanks to these funds. The assets under management of these funds, which exceeded $82.3 billion, confirm the volume of institutional investments flowing into this market.
This momentum has helped Bitcoin’s dominance of the cryptocurrency market, with its market cap surpassing that of Saudi Aramco to become the seventh largest in the world. Bitcoin’s market share peaked at 61.38%, with a new record price of over $93,000. Much of the surge is due to massive inflows into Bitcoin-linked ETFs, which received $4.7 billion in the past week alone, bringing total inflows since their launch in January to $28.2 billion, according to Farside data.
These developments highlight the significant increase in institutional interest in Bitcoin, largely due to the launch and growing success of spot Bitcoin exchange-traded funds. This surge in demand reflects investors’ growing confidence in the future of Bitcoin and its expanding role in institutional investment portfolios.
ETFs are the second most popular choice for investors according to the Signum survey, with 47% of respondents citing them as a way to understand them more closely with traditional investors and the fact that many of them have been launched by major players in the traditional financial sector. This is in line with the growing desire for safe and controlled exposure to the cryptocurrency market, which is attracting interest from institutions and high-net-worth individuals.
Short-term caution vs. long-term optimism
Despite the current caution due to geopolitical tensions and uncertain economic conditions, the outlook for the coming year is optimistic. 56% of investors expect to increase their crypto investments by 2025, driven by expectations of an improvement in the global economy thanks to factors such as monetary easing in the US and economic stimulus packages in China.
The Signum survey confirms a fundamental shift in the way traditional investors view the cryptocurrency market, with these assets becoming increasingly strategically important. With increasing regulatory clarity and the emergence of sophisticated investment products such as spot exchange-traded funds, the market is expected to grow rapidly, driven by new investment flows and more diversified investment strategies.
Blockchain Technology Leads the Way
The Cygnum survey revealed that investors are increasingly interested in blockchain technology over digital assets, with 83% of respondents believing that blockchain will play a significant role in the future of finance, compared to 76% who said digital assets are important.
Likewise, traditional investors continue to focus on the technological potential of blockchain and its cost-effectiveness compared to digital assets themselves. This trend reflects the desire of financial institutions to adopt blockchain technology in their operations, and launch new digital representation platforms and investment products based on this technology.
