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What Drives Institutional Investors to Crypto Investments



The blockchain-based crypto payment system is an innovative technology that offers promising investment opportunities. However, different players in the industry have their own reasons for getting involved in crypto investments.

According to a survey conducted by Binance Research in collaboration with Binance VIP and institutions, institutional investors have three main motivations for engaging with cryptocurrencies. The top reason on the list is the potential return on investment (ROI).

Based on a survey of over 200 institutional clients and VIP users of Binance, the top motivations for investment are the potential return on investment and exposure to technology.

In the world of crypto investment, it’s typically a long-term game. Investors purchase one or more crypto tokens and store them in a wallet, anticipating an eventual increase in the token’s price. This strategy is driven by the potential for a higher ROI. Given the market’s high volatility, many traders prefer this approach, as they believe it offers better earning opportunities through accumulating price differences.

The technology behind cryptocurrency, known as blockchain, has introduced a remarkable system for revolutionizing traditional approaches. As a result, both individuals and institutional players are embracing cryptocurrency as a means of accessing blockchain technology.

According to the survey results, 42.8% of investors find the potential for return on investment (ROI) to be the most compelling motivation for investing. Additionally, 37.5% of investors consider gaining exposure to emerging technology as their primary motivation.

According to the survey, in addition to potential ROI and engaging with emerging technology, portfolio diversification is identified as another key reason for investment.

When analyzing assets under management (AUM), it was found that this survey outcome held true for funds with AUM below US$50M. However, for funds with an AUM above US$75M, portfolio diversification emerged as an even stronger motivation to invest in cryptocurrencies.

Moreover, institutional investors tend to prioritize infrastructure, L1, and L2 sectors over other sectors such as NFT, gaming, and the metaverse. According to the survey, 53.9% of investors expressed interest in infrastructure, while 48.1% were interested in L1 and L2 respectively. This finding aligns with the observation that investors interacted more frequently with spot DEXes compared to gaming and metaverse DEXes, with DeFi emerging as the most widely engaged dApp.

Read also; 

Pump & dump tokens on Bitcoin network: Insights from Industry experts

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