Institutional Investors Raise Bitcoin Exposure as Crypto Sentiment Improves

Institutional investors are increasing their exposure to cryptocurrencies again, led by Bitcoin, as money continues to flow into U.S. spot Bitcoin exchange-traded funds and market sentiment improves.

CoinShares, a digital-asset manager, said a recent survey of institutional investors found Bitcoin was viewed as the cryptocurrency with the strongest growth prospects, Cointelegraph reported on May 7.

The survey was conducted in April and covered 26 institutional investors managing a combined $1.3 trillion in assets. Their average allocation to digital assets was about 1%.

"Bitcoin remains the digital asset with the most attractive growth outlook," James Butterfill, CoinShares' head of research, said.

The survey found that 32% of respondents already invest in Bitcoin, while 25% have allocated capital to Ether. Sentiment toward Solana also improved slightly from the previous quarter.

Respondents cited improving sentiment in the crypto market, the expansion of ETFs and changes in the regulatory environment as reasons for raising their exposure. Internal investment restrictions and regulatory uncertainty, however, remained the main obstacles to broader institutional participation.

CoinShares said institutional flows are also shifting away from traditional altcoins and toward decentralized finance protocols and newer blockchain sectors.

Institutional inflows have also increased. Digital-asset investment products posted net inflows for four straight weeks through May 27, totaling $3.9 billion, according to CoinShares. Most of that demand went into Bitcoin-focused products.

Money has also continued to flow into U.S. spot Bitcoin ETFs. Net inflows into those funds reached about $1 billion this week, according to SoSoValue data. Over the same period, Bitcoin climbed back above $80,000.

The improvement in institutional sentiment aligns with a recent joint survey by Coinbase and EY-Parthenon. In that poll, 73% of institutional investors said they plan to increase their digital-asset allocations this year.

Market participants view the launch of U.S. spot Bitcoin ETFs in January 2024 as a turning point for broader institutional adoption. The structure gave investors a regulated way to gain Bitcoin exposure without the burden of direct custody, lowering barriers to entry.