An analyst at global investment bank JPMorgan says crypto is effectively non-existent as an asset class for most large institutional investors. “Volatility is too high and the lack of an intrinsic return to refer to makes it very difficult“, he added.
JPMorgan on institutional investment in Crypto
JPMorgan analyst Jared Gross discussed crypto and institutional investor interest in the asset class on Bloomberg Friday. The senior investment strategist described:
As an asset class, crypto is effectively non-existent for most large institutional investors … The volatility is too high, the lack of an intrinsic return that you can point to makes it very difficult.
Gross added that he is “obvious“that bitcoin has not proven to be a form of digital gold or a safe haven asset as some had hoped. He continues:
Most institutional investors are probably relieved that they haven’t jumped into this market and probably won’t anytime soon.
The crypto-currency market has dropped significantly this year as the Federal Reserve and other major central banks around the world have raised interest rates to combat inflation. There have also been collapses and bankruptcies within the industry, including the most recent fall of crypto exchange FTX.
Meanwhile, a growing number of banks and financial institutions are offering crypto products and services to their institutional clients. Investment giant State Street, for example, said in September that it was seeing steady demand for crypto assets from institutional investors. Nasdaq recently created a crypto-currency unit called “Nasdaq Digital Assets“, citing increased demand among institutional investors.
In addition, a survey released in November by crypto-currency exchange Coinbase showed that institutional investors increased their allocations during the crypto winter. The firm noted that there is “a strong signal of acceptance of crypto as an asset class.” A study released by financial giant Fidelity in October showed that 74 percent of institutional investors surveyed plan to invest in digital assets.