JPMorgan: Why Institutional Investors Don’t Want Crypto

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  • The heightened volatility in the digital asset class has caused investors to flee, says JPMorgan’s strategist. 
  • 2022 has been a tough year for cryptos because of macroeconomic factors.

JPMorgan’s senior investment strategist said that large individual and institutional investors are not interested in cryptos due to the volatility seen in 2022. Jared Gross told Bloomberg in a podcast that the class of investors was happy that they did not put money in crypto this year and may not do so soon.

As an asset class, crypto is effectively non-existent for most large institutional investors. The volatility is too high, and the lack of an intrinsic return that you can point to makes it very challenging. 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.” Gross said. 

Towards the end of 2020, cryptocurrencies boomed. The following year, many digital assets surged to their all-time high, including Bitcoin, which topped $68,000. That was not the case in 2022. A high inflation rate, costly borrowing rates, and the collapse of large crypto companies saw the flagship cryptocurrency touch $15,000 in November, a drop of about 77% from the ATH.

Bitcoin Has Never Been A Hedge Against Inflation – Says Gross 

Such heightened volatility cannot qualify Bitcoin as digital gold or as a hedge against inflation – which has never been – according to Gross. He added that the interest in digital assets could have disappeared or was not there initially.

It is not the first time JPM has expressed scepticism against crypto, especially in the current bear cycle. The investment bank’s CEO Jamie Dimon has remarked in the past that he was not a supporter of bitcoin, adding that he “personally (thought) that bitcoin (was) worthless.”

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On the contrary, the largest US bank by assets opened access to its wealth management clients for six crypto funds in 2021. The multinational is also involved in, among other funds, Grayscale Bitcoin Trust, Grayscale Ethereum Trust, and Grayscale Ethereum Classic Trust. Regarding the matter, Dimon said that the decision is investor-driven.