United States private investors are foreseeing a surge in crypto investment in the coming months, with more than half of them likely to include digital assets in their portfolios. 

A recent survey from law firm Barnes Thornburg revealed that 84% of participants believe private investment in cryptocurrency will rise over the next 12 months, and more than half (59%) said they are more likely to invest in crypto funds than a year ago.

The survey interviewed 138 limited partners, general partners, and service providers at private equity, venture capital, hedge fund, and investment banking firms active across different industries in the United States.

“That is a shift from last year, when most respondents said the then-current state of the cryptocurrency market had significantly affected their organization in a negative way,” notes the report.

Behind investors’ improved sentiment toward digital assets is the institutional adoption of crypto investment products, such as exchange-traded funds (ETFs) and derivatives. Among the reasons are also the regulatory clarity brought by the debut of crypto-tied ETFs in January and the following market recovery.

US private investors predict surge in crypto investments in 2024 — Report image 0 Private investors' top considerations for investing in a cryptocurrency fund. Source: Barnes Thornburg

Among the 26% of investors who said they are less likely to invest in crypto funds over the next year, the top reasons include crypto market volatility (46%), fraud (43%), and crypto platforms collapse (43%).

“A year and a half away from the FTX collapse, we’ve seen significant recoveries in Bitcoin and other cryptocurrencies. The SEC’s approval of Bitcoin ETFs is a big deal for the industry and may also increase the willingness of allocators to make investments in private crypto funds and other nonregulated products,” said Scott Baels, partner and co-chair of Barnes Thornburg’s private funds and asset management practice.

LPs push for returns

Investors are pushing for more liquidity and better earnings. The survey reveals that the most significant concern for limited partners is “returns,” with 54% of respondents listing it as a primary issue.

Another major issue for limited partners is “financing terms,” from 23% to 50% of participants this year. This change suggests that investors are facing more challenging or less favorable conditions for raising capital. Among general partners, “fundraising” was considered to be the most pressing issue for their business this year, with 40% citing the issue from 23% last year.

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