Solana Sees Massive Increase in Institutional Portfolios

Institutional investors seem to be expanding their investments in altcoins, such as Solana, which has experienced a significant surge in interest from wealth managers and hedge funds, according to CoinShares.

James Butterfill, the head of research at the asset management firm, stated in a report dated April 24, based on a survey of 64 investors managing a collective $600 billion, "Investors are more optimistic for Solana."

The survey revealed that nearly 15% of participants now have investments in SOL, marking a noticeable increase from a previous survey in January where none had invested in the altcoin.

Regarding XRP, Butterfill pointed out that it has witnessed a notable decline, with no current survey participants holding it, a shift from the situation in January.

Although XRP is not currently held by the surveyed institutions, investment products related to the cryptocurrency still received minor inflows, amounting to $1.3 million for the week ending April 19, as per the CoinShares report.

Solana ranked third in terms of the "most compelling growth outlook," with just under 15% of respondents agreeing, an increase from just over 10% in the previous survey from January.

Bitcoin continues to be the favorite among investors, with 41% believing it offers the best growth potential.

Ether follows as the second choice, with a little over 30% of investors optimistic about its growth prospects, although Butterfill observed that enthusiasm for Ether has declined since January, with its score dropping from about 35%.

The survey also indicated an increase in the average cryptocurrency allocation within investors' portfolios to 3%, up from 1.3% in January, the highest since the survey's inception in 2021.

Butterfill attributed this growth to institutional investors who began investing in Bitcoin through U.S. ETFs.

Equities remain the most heavily weighted asset class, representing more than 55% of portfolios.

Investors are primarily drawn to digital assets due to the potential of distributed ledger technology, and despite the general price increase of most cryptocurrencies since January, more investors now believe they represent good value, increasing from under 15% to over 20%.

Butterfill also mentioned that client demand has increased, typically seen during periods of positive price momentum.

While the overall sentiment toward cryptocurrencies has been positive, wealth managers and institutional investors reported significant entry barriers to the asset class.

For those without crypto investments, regulatory issues are still a major hurdle, as noted by Butterfill, who suggested that this could be due to corporate limitations and interpretations of regulatory guidelines.

For those already investing in cryptocurrencies, regulatory issues and political factors are seen as the top risks, an increase from the previous survey results in January.

Butterfull found it encouraging that concerns over volatility and custody issues are becoming less significant.

Sources:

https://cointelegraph.com/news/solana-dramatic-increase-institutional-portfolios-coinshares

https://blog.coinshares.com/volume-179-digital-asset-fund-flows-weekly-report-84f3312ba409