Cryptocurrency demand in Europe driven by continent's negative interest rates
European institutional investors are more attracted to cryptocurrencies compared to their U.S.-based counterparts.
Fri, 12 Jun 2020, 07:56 am UTC
The result of a recent survey suggests that cryptocurrency demand among institutional investors is higher in Europe compared to demand from their U.S.-based counterparts. Apparently, European investors generally hold a more optimistic view on digital assets such as Bitcoin and Ether, which might, in part, due to the negative interest rate across the continent since 2014.
A survey by Fidelity revealed that more European institutional investors own cryptocurrencies compared to their American counterparts. They are not shy when it comes to investing in digital assets are 45 percent of the Europeans surveyed said they own cryptos, Forbes reported. Meanwhile, only 27 percent of institutional investors based in the United States revealed that they own digital assets.
The survey was done by Fidelity Digital Assets, the cryptocurrency-focused subsidiary of the Boston-based financial services firm Fidelity Investments. The survey ran from November 2019 until March this year.
The institutional investors included in the survey are composed of various venture funds, hedge funds, financial advisors, and family offices. There are 774 respondents to the survey with 381 investors based in Europe while the remaining 393 are based in the United State.
Europeans are also more appreciative of the relative lack of government intervention when it comes to digital assets. Twenty-five percent of European investors find that “cryptocurrencies being free of government intervention a very appealing factor.” Meanwhile, only 10 percent of their American counterparts feel the same way.
While institutional investors from both sides of the Atlantic find cryptocurrencies attractive as an investment option, the digital assets appeal more to the Europeans than the Americans. Only 74 percent of the U.S. institutional investors surveyed say cryptocurrency is appealing compared to the 82 percent among their European counterparts who feel the same.
Forbes noted that the recent data reverses the usual image of Americans being more pro-market and Europeans being more traditional investors. “It’s a flip on the usual narrative of pro-market, pro-private sector Americans vs. government-loving Europeans,” the publication wrote. “Europeans now see cryptocurrency as a desirable asset class and for some, it’s precisely because it avoids the intervention of the political or technocratic class that defines the European Union and the European Central Bank.”
The publication posits that Europe’s demand for cryptocurrency might be a result of the negative interest rate situation that has been plaguing the continent for years now. “For six years, the European Central Bank tried to get its way out from negative interest, each time failing due to the need to further stimulate economic growth,” Forbes argued. “Negative interest rates penalized savers, forcing them to put their money into bubbling assets in order not to lose money staying flat, creating bad debt, and halving the banking sector in Europe.”
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