JPMorgan: Crypto Does Not Exist As An Asset Class For Major Investment Companies
- The volatility is excessive, and the lack of an intrinsic return makes it challenging.
- Bitcoin has not been demonstrated to be a digital gold or safe haven asset.
- Many banks and financial organizations offer crypto products and services to institutional clientele.
Crypto is practically non-existent as an asset class for most large institutional investors, according to a strategist at global investment bank JPMorgan. Because the volatility is too severe, the lack of an inherent return to which investors can point makes it difficult.
JPMorgan Asset Management‘s head of institutional portfolio management, Jared Gross, discussed cryptocurrency and institutional investors’ interest in the asset class. According to the top investment strategist of JPMorgan, bitcoin is practically nonexistent as an asset class for most large institutional investors. The volatility is too high, and the lack of an intrinsic return to point makes it difficult.
Gross went on to say that it is “self-evident” that bitcoin has not proven to be a type of digital gold or haven asset, as some had hoped. He went on to say that most institutional investors are probably breathing a sigh of relief that they did not enter that market and are unlikely to do so anytime soon.
The crypto market has plummeted this year as the Federal Reserve and other major central banks across the world hiked interest rates in an attempt to combat inflation. There have also been breakdowns and bankruptcies in the sector, most recently the crypto exchange FTX.
Meanwhile, an increasing number of banks and financial institutions are providing institutional clients with crypto products and services. State Street stated in September that it expects institutional investors to continue to seek crypto assets. Nasdaq recently launched “Nasdaq Digital Assets,” claiming rising demand from institutional investors.
Furthermore, a Coinbase poll issued in November revealed that institutional investors raised their holdings throughout the crypto cold. The business noted that there is a strong signal of cryptocurrency acceptability as an asset class. According to a study conducted in October by financial behemoth Fidelity, 74% of institutional investors polled intend to invest in digital assets.
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