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Bitcoin crash: what is the main fear when investing in bitcoin?

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A survey of institutional investors has revealed that security and custody of assets are seen as the biggest obstacle to investing in bitcoin and other cryptocurrencies in the sector. This was reported by Bloomberg on Thursday, January 6.

The interviews were reportedly conducted with 50 institutional investors, including investment banks JP Morgan and Goldman Sachs, as well as 50 asset managers from the United States and Europe (UK, Germany and France) and the United Arab Emirates. The group collectively manages $108.4 billion in assets.

Contrary to the belief that volatility or lack of regulatory clarity are the main fears of large investors, the results showed that 79% of respondents cited security as their main concern about the bitcoin and cryptocurrency market.

“Our research shows that institutional investors have correctly identified custody and security as a key differentiator for this asset class,” said Henry Howell, head of business development at Nickel Digital. He said advances in solutions for the institutional sector are encouraging more large-cap investors to gain exposure to cryptocurrencies.

However, price volatility is also a concern for the institutional sector. The survey revealed that for 67% of participants, volatility is a key factor when entering the cryptoasset market. At the same time, 56% cited market capitalization and 49% the regulatory environment as reasons for not investing.

In addition, the survey indicates that 73% of respondents believe that if the SEC receives regulatory powers over cryptocurrencies, the price will be positively affected.

Institutional investment in bitcoin and other cryptocurrencies has seen a significant uptick in 2020 and 2021. A study published last August showed that the institutional sector already had almost 1.5 million BTC under management, or about 8% of the total supply of bitcoins. Block.one and MicroStrategy, the companies with the largest amount of bitcoins, add up to more than 162,000 BTC, acquired between 2020 and 2021.

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