During the first quarter of the year, institutional investors increasingly pursued exposure to cryptocurrency, driven by the introduction of several US-based spot Bitcoin exchange-traded funds (ETFs) in January.

According to the CoinShares Digital Fund Manager survey, institutional investors have substantially raised their digital asset allocations to 3% in their portfolios, marking the highest level since the survey began in 2021. Many of these investors credited their heightened exposure to digital asset investments to distributed ledger technology. They also perceive digital assets as offering good value and see increased demand for investing in Bitcoin as a diversifier.

Bitcoin remains the primary digital asset of interest among institutional investors, with over a quarter of respondents indicating exposure to BTC via spot ETFs. Ethereum holds the second position, although investor interest has waned compared to previous surveys. BTC and ETH are still viewed as having the most promising growth outlook.

Solana has garnered increased investor enthusiasm, with its allocation rising to 14%, driven by significant investors expanding their holdings in the rapidly growing blockchain network. However, XRP has experienced a notable decline in investor interest, with none of the surveyed investors mentioning holding it.

Despite the growing exposure to digital assets and the availability of Bitcoin ETFs, many investors still face obstacles in accessing this asset class. Regulatory concerns remain the primary barrier, particularly in the US, where financial regulators like the SEC have taken legal actions against major players such as Binance and Coinbase. Additionally, the inherent volatility of the sector continues to be a significant concern for some investors, although issues related to custody, reputation risk, and the absence of a fundamental investment case are becoming less problematic.