Institutional Investors Still Bullish About Crypto Despite Ongoing Market Crisis

The surprising implosion of the crypto derivatives exchange FTX and its ongoing unraveling dragged the crypto winter and triggered a crisis that has sent top crypto assets tumbling. Despite this, institutional investors are bullish on cryptocurrency and are currently buying crypto assets despite the market downturn.

The Oracle of Omaha, Warren Buffett, is always quoted for his advice to investors, "Be fearful when others are greedy, be greedy when others are fearful." And it looks like institutional investors are heeding Buffett's advice these days.

Amid the fear, uncertainty and doubt plaguing the industry nowadays, Coinbase's latest survey revealed that institutional investors are bullish and while others are dumping their crypto assets, these investors are buying cryptocurrencies like kids in candyland.

Coinbase conducted a survey involving 140 institutional investors, who represented assets of around $2.6 trillion. Over the past year, 62% of the participants increased their crypto investment, with only 12% of the respondents admitting to having reduced their digital asset allocation, the study revealed.

Moreover, the majority of those surveyed, or 58% of the respondents, said they plan to increase their crypto portfolios over the next three years, with only 6% planning to decrease their exposure to the digital asset. Interestingly, despite the bear market, the study showed that institutional investors have a positive overall sentiment toward the industry.

A large chunk of respondents, or 72% of the participants, supported the belief that cryptocurrency is here to stay. According to Coinbase, "given the current climate, this is a strong signal of the acceptance of crypto as an asset class."

However, Coinbase noted that while the overall sentiment toward crypto remains positive, that crypto winter impacted short-term expectations for price appreciation. In the survey, 54% noted they anticipate crypto prices to be range-bound, while only 29% of the respondents said they anticipate crypto assets "to trend lower in the 12 months."

The price outlook, however, remained optimistic, according to the study. The majority of the respondents, or 71% of the surveyed investors, noted that they expect crypto valuations to surge over the long term. It is worth noting, however, that the Coinbase survey was conducted between Sept. 21 and Oct. 27, a period that was much better than the one the industry is currently undergoing.

The first report that started the series of events leading to the filing for bankruptcy of FTX was published on Nov. 2. At the time, it revealed the leaked balance sheet of Sam Bankman-Fried's founded trading firm Alameda Research, showing that it was heavily reliant on FTT, the native token of FTX.

After that, the FTX unraveling ensued and Binance's CEO Changpeng Zhao, more popularly known as CZ, announced that it is selling all of its FTTs. Panic followed and the FTT price nosedived. With allegations of fraud and mismanagement, SBF stepped down from his post and FTX filed for bankruptcy on Nov. 11.

Coinbase's study might have had different results had it been conducted in the wake of the FTX collapse. Or maybe not. With their deep pockets, institutional investors, unlike retail investors, usually have diamond hands and can withstand market disruptions in a way that retail investors cannot.