- Money managers managing some US$12.3 trillion in assets are pitting cryptocurrencies as ripe for a major correction next year
- Number of money managers moving into the cryptocurrency space or increasing their allocations is rising even as they suggest cryptocurrencies are unsuited as an investment for retail investors“Do as I say, not as a I do.”
– Every bad boss, ever
According to a survey of money managers done by Natixis Investment Managers, nearly three quarters of institutions polled say that cryptocurrencies are not an appropriate investment for retail investors, while suggesting that they are a “top contender” for a “major correction” next year.
Yet 28% of the same institutions surveyed currently already invest in cryptocurrencies, and of those, nearly a third say they plan to increase their allocations next year.
Overall 8% of all institutional investors surveyed, plan to increase their allocations to cryptocurrencies next year.
The irony is palpable.
Considering that no so long ago, Wall Street was also touting the very same asset-backed securities that it was betting against to go sour, it would be naïve to assume that money managers would reveal their strategies in a survey.
A number of big fund managers and pensions have already dipped their toes in the cryptocurrency waters.
Some of Wall Street’s biggest names have already tossed their hat in the ring, suggesting that bitcoin could act as a good inflation hedge in an already stimulus-heavy environment, so it would be somewhat surprising if more didn’t follow suit.
Crypto-skeptical financial institutions have been filling out “digital asset” trading desks, because using the term “cryptocurrency” would be too vulgar, while offering some of their most prized clients, exclusive, institutional-grade access to the nascent asset class.
Nonetheless, and as evidenced by the sharp correction of over 20% in the span of a few hours on Saturday, bitcoin and its ilk remain highly volatile, susceptible to competing narratives and subject to speculation.
And while dire predictions for the demise of cryptocurrencies have been a constant running theme, most have come out short, much to the chagrin of the likes of Nouriel Roubini, an economist with a long-standing axe to grind against bitcoin.
Since breaking into the mainstream consciousness, bitcoin has soared by more than 5,000% over the past five years, well above any other asset class.
And it’s also important to interpret the Natixis survey contextually – encompassing 500 institutional investors across multiple countries, including four central banks, twenty sovereign wealth funds and more than 150 corporate pension plans, these are hardly a cross section of swashbuckling risk-taking investors.
