Crypto, a non-existent asset class for most institutional investors?

In 2022, the crypto market saw a plunge of more than 70% compared to last year. This situation was caused by the increase in interest rates by the Federal Reserve, in order to fight against inflation. A Goldman Sachs executive comments on the perception that major investors now have of this asset class.

Are investors disappointed with cryptos?

Jared Gross is head of institutional portfolio strategy at Goldman Sachs Investment Bank. At the end of the week, he gave an interview to Bloomberg in which he spoke about crypto and the interest in it from institutional investors.

“As an asset class, crypto is non-existent for most large institutional investors. Volatility is too high. The lack of intrinsic return that you can point to makes it very difficult (…) Most institutional investors are probably breathing a sigh of relief that they haven’t jumped into this market and probably won’t be doing it anytime soon”does he have affirmed.

To this effect, he indicated that it is obvious that bitcoin has not proven itself to be a form of digital gold or a safe-haven asset as some had hoped.

These words may imply that large institutional investors are disappointed with cryptos. On the other hand, they increased their exposure to digital assets, despite the bear market. This was shown by the results of a survey conducted by the crypto exchange, Coinbase, published last month. Overall, 62% of investors already present in the segment have increased their investments over the last 12 months. Only 12% reduced their positions.

The words of the Goldman Sachs executive come to contradict the pro-crypto attitude of investors in the markets. Need to know more banks and financial institutions offer crypto products and services to their institutional clients. On the other hand, a survey by Fidelity agrees. According to her, 74% of institutional investors surveyed plan to invest in digital assets, in the short term.

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