In an episode of Bloomberg’s What Goes Up podcast, JPMorgan’s head of institutional portfolio strategy Jared Gross says that crypto is too difficult to fit into institutional portfolios.
“As an asset class, crypto is effectively non-existent for most large institutional investors. The volatility is too high, the lack of an intrinsic return that you can point to makes it very challenging.”
Gross also says that despite Bitcoin bulls aiming for BTC to become a form of digital gold, it is self-evident that it hasn’t happened.
“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.”
Contrary to what Gross says, Bloomberg’s chief commodity strategist Mike McGlone says in the near future, it will be risky for institutions to not have at least some allocation to the crypto markets.
“So to me, the risk is going forward that I think for most major institutions on a five-year basis at least, the risk is not being somewhat allocated to this space. And I don’t mean the 20,000 highly-speculative cryptos that you can find on CoinMarketCap. I mean the top 10, the top 100, an index that tracks those. So definitely Bitcoin, Ethereum. Yes, they could drop down, but to me an index that tracks those is just going to continue doing what it’s doing and these types of things often carve that foundation.
The key thing to remember right now is the Fed is still pounding hard, all risk assets are going down. Cryptos were the fastest one on the way up and the fastest one on the way down.”