Institutional
Crypto Outlook
SurveyJune 2023

Contents
01 Overview
02 Interests and Motivations
03 Portfolio Allocation and Outlook of Crypto
04 Drivers of Crypto Adoption
05 Trading and Custody
06 Sources of Information

A Joint Study byBinance Research andBinance VIP & Institutional

Binance Research is the research arm of Binance, the world's
leading cryptocurrency exchange. The team is committed todelivering objective, independent, and comprehensive analysis
and aims to be the thought leader in the crypto space. Ouranalysts publish insightful thought pieces regularly on topics
related to, but not limited to, the crypto ecosystem, blockchain
technologies, and the latest market themes.

Binance VIP & Institutional helps institutions and sophisticatedinvestors optimize their digital assets trading experience. We
partner closely with hedge funds, asset managers, familyofﬁces, proprietary trading ﬁrms, market markets, brokers, andmore. Our global team of trusted experts provides
industry-leading knowledge, personalized care, and VIP accessto the largest and most liquid digital asset exchange.

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Methodology
The Institutional Crypto Outlook Survey is based on a global survey withresponses from 208 Binance institutional clients and VIP users.
Collectively, we refer to respondents as "institutional investors" in thisreport.
The survey, which ran from March 31 to May 15, 2023, explored questions
surrounding the respondents' attitudes, preferences, adoption, andmotivations toward cryptocurrency investments.

OverviewKey Takeaways
The Institutional Crypto Outlook Survey consists of insights generated from
more than 200 global institutional investors

Outlook

AllocationInterests

Adoption

63.5% of respondents
indicated that they are positive
about the outlook of crypto
over the next 12 months. The
magnitude of investor
optimism increased further
when asked about their
outlook for the next decade,with an overwhelming majority(88.0%) indicating that they
are positive.

47.1% of institutional
investors maintained theircrypto allocation over the past
year and over a third (35.6%)
increased their allocation in
the same period. Goingforward, most (50%) expect toincrease their allocation, with
only 4.3% expecting to reduce
allocation to crypto in the next
12 months.

Infrastructure, L1 and L2 areareas of focus amonginstitutional investors. 53.9%
of investors foundinfrastructure to be the sectorof most importance to them ortheir fund. This was closely
followed by L1 and L2 sectors
at 48.1% and 43.8%
respectively. In terms of usage,
DeFi dApps were the mostwidely used in recent months.

Institutional investors believe
more real-world use cases andincreased regulatory clarity will
help drive crypto adoption.

Who Are Our Respondents?
A diverse mix of global institutional investors with varying levels of AUM,and experience
Crypto Assets Under Management

Crypto Investing Experience◆ Funds with crypto assets under management (“AUM”) < $25M
made up the bulk of respondents (52.4%), followed by thosewith >$100M (22.6%).

◆ Nearly half of respondents (48.1%) have more than 5 years ofinvesting experience in crypto.

Questions: (1) How much of you or your ﬁrm’s total assets under management is in crypto? (2) How long have you or your team been trading/investing in crypto?

Interests andMotivations

Crypto Use Cases
Intraday strategies were the most commonly citedPrimary Use Case◆ The majority (44.7%) utilize crypto for intraday strategies.
◆Additionally, the most commonly cited use cases under“Others” (23.1%) are for market-making and arbitrage
activities.

Question: What best describes your primary use case for crypto?

By AUM:◆ The result is largely the same when analyzing the result byfund sizes - most cited “Intraday Strategies” as the primaryuse case.

Why Invest in Cryptocurrencies?
Return on investment and exposure to technology are key motivations
Motivation behind Crypto investments

By AUM:◆ 42.8% of investors believe that the most compelling case forinvesting in cryptocurrencies is the potential for ROI.

◆ The observation was consistent for funds with an AUM
below US$50M.

◆ This was followed by 37.5% of investors who believe in
gaining exposure to emerging technology as the primary
motivation.

◆ Interestingly, for funds with an AUM above US$75M,
portfolio diversiﬁcation surfaced as an additional
motivation to invest in cryptocurrencies.

Question: What do you believe is the most compelling case for investing in cryptocurrency?

Sectors of Interest
Infrastructure, L1 and L2 are areas of focus among institutional investors
Core Sectors

Other Sub-Sectors and Niche Areas◆ 53.9% of investors found infrastructure to be the sector ofmost importance to them or their fund. This was closely
followed by L1 and L2 sectors at 48.1% and 43.8%
respectively.

◆ 51.0% of investors see Wallet Innovation (e.g.,
self-custody, MPC, improved UI/UX) as an important area offocus.

◆ Gaming, NFTs, and Metaverse were generally considered to
be of lower importance.

◆ This was followed by ZK technology at 26.9% and AI
Integration with Crypto at 20.7%.

Questions: (1) How important are the following core crypto sectors to you or your fund? (e.g. the sector is an area of focus or has sizable investments) (2) How important are the following
crypto sub-sectors to you or your fund? (e.g. the sub-sector is an area of focus or has sizable investments)

dApp Usage
DeFi dApps were most widely used
dApps used in the past 3 months◆ DeFi seized the top spot as the mostinteracted category amongst respondents.
In particular, spot DEXes were the mostutilized dApp in the past three months,followed by perps DEXes, lending, and LSD.
◆ On the other hand, the Gaming andMetaverse sector has yet to witness muchtraction, with less than 6% of respondents
interacting with these dApps.

Question: Which of the following types of dApps have you interacted with in the past three months? (Select all that apply)

Portfolio Allocation
and Outlook ofCrypto

Historical Changes in Perception of Crypto
Largely unchanged, and with a greater proportion having turned morepositive than negative
Changes in View over the Past 12 Months◆ Interestingly, while the perception of crypto
and Bitcoin has remained largely unchanged
over the past 12 months, a larger proportionof investors have become more positive
towards Bitcoin compared to the broader
crypto sector (47.3% vs. 33.2%
respectively).
◆ This may be due to recent market
developments, technological innovations in
the Bitcoin ecosystem, or perhaps stronger
conviction in Bitcoin’s narrative as digital
gold amidst an uncertain macro
environment.

Questions: (1) As a whole, how has your perception of the crypto market changed over the last 12 months? (2) How has your perception of Bitcoin changed over the last 12 months?

Historical Changes in Crypto Allocation
Most investors have maintained their crypto allocations in the past year
Crypto Allocation in the Past 12 Months◆ Despite being a tumultuous period, 47.1%
of respondents maintained their allocations
to crypto in the past 12 months.
◆ Interestingly, a higher proportion ofinvestors increased their allocation thandecreased (35.6% vs. 17.3%) during thesame period.

Question: How has your crypto allocation as a percentage of your overall portfolio changed in the past 12 months?

Outlook of Crypto
Institutional investors are generally optimistic about the outlook of thecrypto market
Outlook over the Next 12 Months◆ For the next 12 months, most respondents(63.5%) indicated that they were positive
about the outlook of crypto.
◆ When asked about their outlook for the next
decade, the magnitude of investor optimism
increased further, with an overwhelming
majority (88.0%) indicating that they arepositive.

Questions: (1) What is your outlook of the crypto market over the next 12 months? (2) What is your outlook of the crypto market over the next 10 years?

Expected Changes in Crypto Allocation
Many expect to increase their crypto allocation in the next 12 months
Crypto Allocation in the Next 12 Months◆ Looking ahead, the majority of respondents
expect to either increase or maintain theircrypto allocation.
◆ Only 4.3% expecting to reduce their
allocation to the asset class.

Question: How will your percentage allocation to crypto likely change in the next 12 months?

Drivers of Crypto
AdoptionFactors Driving Crypto AdoptionMore real-world use cases and increased regulatory clarity are believed to
be key in driving crypto adoption
Drivers of Crypto Adoption◆ Demand for real-world use cases (26.9%)
and regulatory clarity (25.3%) stand out asdrivers of crypto adoption.
◆ These were closely followed by the need formore institutional involvement throughbanks and other ﬁnancial institutions(19.3%) and stronger security, such as
fraud detection and custody solutions(18.1%).
◆ The results highlight institutional investors'
belief in broad ecosystem developments
rather than short-term price action in driving
widespread crypto adoption.

Question: Select up to three factors that you think will be most critical in driving widespread crypto adoption.

Concerns in Crypto
Regulatory risks and counterparty risks were cited as biggest concerns
today
Concerns in crypto◆ Regulatory risk was the most cited concern
pertaining to the crypto market today(29.7% of responses). This was followed bycounterparty and custody risks at 21.6%
and 15.7%, respectively.
◆ Price volatility seemingly undeterredinstitutional investors (2.8% of responses).
This is reinforced by responses to a separate
survey question where over 80% ofinvestors stated that they are highly
comfortable with crypto’s volatility.

Question: What is your greatest concern in the crypto market right now? If you have not invested in crypto, what are the factors stopping you from adopting or trading crypto? (Select all that apply)Trading and CustodyTrading Venues
Institutional investors largely trade on centralized exchanges
Trading Platform◆ An overwhelming majority of institutional investors (90.5%)
execute most of their trades on centralized exchanges(“CEXes”).
◆ Only a minority cited decentralized exchanges (“DEXes”) andover-the-counter (“OTC”) desks as their preferred tradingvenues.
Question: Where are you executing most of your trades?

By AUM:◆ On closer examination, while most trade predominantly on
CEXes, it is interesting to note that with increasing fund size, agrowing proportion cited alternative venues (DEX, OTC) as
where they execute most of their trades.
◆ Over 20% of respondents with AUM > US$100M tradepredominantly on DEXes and OTC desks compared to less than
4% for respondents with AUM < US$25M.

Custody of AssetsMost store the bulk of their assets on centralized exchanges
Custody Mediums◆ 58.2% of institutional investors store their crypto assets onCEXes, while 20.2% preferred institutional custodianssuch as Ceffu and Fireblocks.

By AUM:◆ This observation was reinforced across fund sizes, with mostinvestors using CEXes for custody of their assets. However,institutional custodians noticeably rose in preference as amedium for custody amongst funds with an AUM of $50M $75M (54.5%).
◆ Funds with AUM > $100M appear to employ various mediums
to safeguard their assets.

Question: Where are you holding the bulk of your crypto assets?

Evaluating Centralized Exchanges
Liquidity, Security, and Reputation are key traits that institutional investors
prioritize
Considerations in Choosing a Centralized Exchange◆ Liquidity is the most important trait for
institutional investors when evaluating acentralized exchange for their trading needs.
This is understandable, given that
institutional investors tend to trade in larger
sizes.
◆ Security and reputation are also criticalconsiderations that are clearly top of mind
for institutional investors, particularly as
most of them store the bulk of their assets
on centralized exchanges.
◆ While competitive fees are still important, it
is clear that institutional investors place
relatively less emphasis on this.

Question: Select up to three of the most important traits when you evaluate a centralized exchange for your trading needs.
Total number of responses = 599

Sources ofInformation

Sources of Information
Social media is a widely relied upon source for information and news
Information Sources◆ 65.4% of respondents frequently usedsocial media platforms (e.g., Twitter,
Telegram, Discord) to receive up-to-date
information about crypto.
◆ This was followed by 50.0% who usedcrypto news outlets (e.g., Binance News,Coindesk, Cointelegraph) and 39.9% who
sourced information from industry
professionals.
◆ Mainstream and business news outlets wereoccasionally used, while a minority rely on
friends and/or family for information.

Question: What sources do you rely on to receive up-to-date information about crypto?

Contributors

JieXuan Chua, CFA

Shivam Sharma

Colin Chan

Jie Xuan (“JX”) is currently working forBinance as a Macro Researcher. Before
joining Binance, he worked as a GlobalInvestment Specialist with J.P. Morgan andhad prior Equity Research experiences atvarious fund houses. JX is a CFAcharterholder. He has been involved in thecryptocurrency space since 2017.

Shivam is currently working for Binance asa Macro Researcher. Before joining
Binance, he worked as an Investment
Banking Associate / Analyst at Bank ofAmerica on the Debt Capital Markets desk,specializing in European FinancialInstitutions. Shivam holds a BSc in
Economics from the London School of
Economics & Political Science (“LSE”) andhas been involved in the cryptocurrency
space since 2017.

Colin is currently an intern with Binance on theMacro Research team. Before joining Binance,
he interned with Genesis Global Trading as atrader. Additionally, Colin has had experience asa data analyst, spending time with Paypal’sEnterprise Architecture Team and Graticule
Asset Management Asia’s Digital Assets Team.
He was also a Solidity developer at Morpheus
Labs. Colin is an undergraduate at the National
University of Singapore, studying Business andComputing (Information Systems). His interests
primarily lie in DeFi and quantitative analysis.

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