Is Crypto Non-Existent For Institutional Crypto Investors: A Reality Check

When there is a change, there is resistance and especially from the sides of those who are going to be washed off by its impacts. The case has been the same with the change being brought about by cryptocurrencies and resistance by the global banking institutions that have become too used to controlling the mountains of wealth.

In Bloomberg’s weekly podcast, Jared Gross, head of institutional portfolio strategy at JP Morgan expressed his insouciant take on cryptocurrencies. Jared said, “ As an asset class, crypto is effectively nonexistent for the largest institutional investors”. Jared Gross seemed particularly perturbed about the acute volatility and ‘lack of any intrinsic returns’ in cryptocurrencies. 

These views are coming from an influential position in Morgan and align perfectly with the take of their CEO Jamie Dimon who called crypto ‘a decentralized Ponzi scheme’ this September. However, it is surprising that the views of these big shots are being undermined by the actions of the bank. 

This November, JP Morgan executed its first cross-border financial transactions via Polygon, an Ethereum Layer-2 solution. Apart from that, JP Morgan has a dedicated blockchain division named Onyx that terms itself as the ‘world’s first bank-led platform of exchange of digital assets’. 

On one hand, Mr. CEO criticizes the entire industry as a Ponzi scheme, on the other hand, JP Morgan establishes dedicated divisions to cater to the needs of revolutionizing finance. Seems that the mismatch in actions and words of a leading global investment bank portrays the FOMO that traditional financial institutions have to undergo because of blockchain tech.

Apart from this, the statement by Jared Gross does not seem to be anything more than an ill-informed personal opinion. According to past market trends, institutional investors are gradually exposing their portfolios to cryptocurrencies and designating separate funds for crypto investments. The empirical data depicts that a single percent of portfolio exposure in crypto has resulted in outperformance of more than 14% in the last 7 years. 

Recent Institutional Investments in Crypto Industry

It is true that the markets are highly unstable due to the recent financial blunder from a leading centralized exchange, it is also true that the price correction has drawn adequate attention of institutional investors towards cryptocurrencies. The third quarter of 2022 has seen some monumental levels of institutional investments in the blockchain space. 

Shima Capital has launched a $200 million blockchain fund, Invesco is already working towards creating a metaverse-centric investment fund, Felix Capital has raised just over $600 million for its fourth blockchain fund, Barclays also going in for digital asset investing, and finally, South Korean government has allocated $177 million only for metaverse projects. 

If all these millions of dollars going towards blockchain innovation even during the worst of the market phase is ‘non-existent’ for JP’s executives, the day might not be too far when the bank would need more visionary leaders in their arsenal.

Cryptocurrencies are here to stay and disrupt the banking industry to make it more transparent and less controlling. The world is evolving and the traditional banking industry has to adapt accordingly. 

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