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  • Writer's pictureConnie Chan

JPMorgan: Institutional Investors Steering Clear Of Crypto

An Analyst from global investment giant JPMorgan has revealed that large institutional investors are actively avoiding crypto, with the asset class not even on their radar when it comes to investments.

According to the analyst, thanks to high volatility, institutional investors feel relieved about staying away from crypto.

Crypto Not On The Radar

In a free-wheeling conversation, the head of institutional portfolio strategy at JPMorgan’s Asset Management, Jared Gross, discussed institutional investors and their outlook toward crypto. The strategist revealed that as an asset class, crypto was non-existent for most institutional investors. He attributed their lack of interest to several factors, including significant volatility and the dearth of an intrinsic return on crypto assets.

“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 challenging.”

He further added that it was fairly clear that Bitcoin had not lived up to its billing as a form of digital gold or a haven asset, as many had hoped it would. He stated that, on the contrary, institutional investors were relieved they did not jump into the market and aren’t going to anytime soon either.

“Most institutional investors probably are breathing a sigh of relief that they didn’t jump into that market and are probably not going to be doing so anytime soon.”

Not The Only One With A Gloomy Outlook

Jared Gross’s sentiments were echoed by CEO Jamie Dimon, who has been a harsh critic of cryptocurrencies. Dimon had recently called cryptocurrencies a sideshow, comparing tokens to pet rocks. Dimon has been skeptical of cryptocurrencies since Bitcoin’s early days. The criticism of the asset class was particularly harsh after JPMorgan developed the JPM Coin, which the bank calls a permissioned system that can serve as a payment rail and deposit account ledger.

However, it is essential to remember that JPMorgan has always had an uneasy relationship with the cryptocurrency industry.

Banks And Financial Institutions Still Offering Crypto

Despite the pessimistic outlook, a number of banks and financial institutions are still offering crypto products and services to their institutional clients. Investment giant State Street had stated back in September that it sees the demand for crypto assets to continue from institutional investors. Nasdaq has also recently established a crypto unit called Nasdaq Digital Assets on the back of increasing demand from institutional investors.

Additionally, in a November survey, cryptocurrency exchange Coinbase revealed that institutional investors have been increasing their allocations during the ongoing bear cycle. It further emphasized that the increase in allocation is a strong indicator of crypto’s acceptance as an asset class. A study conducted by Fidelity back in October stated that 74% of institutional investors were planning on investing in digital assets.

Crypto Winter Continues

Meanwhile, the cryptocurrency market is still reeling thanks to the ongoing crypto winter, with the Federal Reserve and other major banks around the globe raising interest rates to fight rising inflation. As a result, the industry has seen the collapse and bankruptcy of several prominent players in the sector, with the most recent and prominent ones being that of FTX and Alameda Research.

It is unlikely that prices will recover during the year, with some coins having lost 80% of their value over the course of the year.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.


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