The volatility of the asset class still poses a challenge for money managers, noted JPMorgan’s head of institutional portfolio strategy.
Large institutional investors are still largely staying away from the crypto market as the asset class’s volatility poses a challenge for asset managers, Jared Gross, head of institutional portfolio strategy at JPMorgan Asset Management, told Bloomberg.
“As an asset class, crypto is virtually non-existent for most large institutional investors,” Gross noted, explaining that “the volatility is too high, the lack of an intrinsic return to point to makes it very challenging.”
Gross believes that most institutional investors are “breathing a sigh of relief that they didn’t jump into this market,” which may not be the case any time soon.
The bear market also ended the idea that Bitcoin
could be a form of digital gold or serve as an inflation hedge, Gross noted, stating it “goes without saying” that this is not the case.
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It has been a year of dramatic falls for the crypto market. As of this writing, bitcoin has fallen from $47,700 in January to below $17,000 by the end of December, while ether
has fallen from $3,700 to $1,200 over the same period. Total crypto market cap has plummeted from $2.2 trillion to nearly $810 billion, according to CoinMarketCap.
Although cryptocurrencies can still be left out of many institutional portfolios, large financial institutions are increasingly embracing them. In October, America’s oldest bank, BNY Mellon, announced it would protect ether and bitcoin for select institutional clients. In addition, French bank Société Générale received regulatory approval as a digital asset service provider.
Robin Vince, CEO of BNY Mellon, noted that “customer demand” was the “tipping point” behind the adoption of institutional crypto services, Cointelegraph reported.
According to a recent report by JPMorgan Chase, nearly 43 million Americans, or 13% of the population, have owned crypto assets at least once in their lives. The number has increased dramatically since before 2020, when it was only around 3%.