According to a senior investment strategist at JPMorgan Asset Management, money managers who have avoided the numerous ups and downs of cryptocurrencies may be feeling relieved for having done so.
“As an asset class, crypto is effectively nonexistent for most large institutional investors,” Jared Gross, head of institutional portfolio strategy at the bank, said on this week’s episode of Bloomberg’s “What Goes Up” podcast. “The volatility is too high, the lack of an intrinsic return that you can point to makes it very challenging.”
In the past, there used to be some hope that Bitcoin could be a form of digital gold or haven asset that could provide inflation protection. But it is “self-evident” that hasn’t really happened, Gross said.
“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.”
In 2020 and 2021, cryptocurrency market experienced exponential frowth, helped in part by a number of established financial companies entering the market or at the very least endorsing it. For those who were interested in cryptocurrencies, this was a significant event since they felt that this kind of embrace validated the fledgling sector.
But as the Federal Reserve and other significant central banks across the world hiked interest rates to combat historic inflation, digital assets have suffered greatly this year.
A setting this unfriendly has been detrimental to crypto.
Bitcoin, the largest cryptocurrency, has shed 60% of its value in 2022, and Ether has tumbled roughly 70%.
Bitcoin on Friday was trading around $16,800 — down from its peak of $65K a year ago.
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