Cryptocurrency: Crypto is ‘best candidate’ for correction, fund managers say
Digital assets are the ‘top contender’ for a ‘major correction’ in 2022, with nearly three-quarters of institutions surveyed saying they are not a suitable investment for most retail investors, according to a survey for Natixis Investment Managers.
Meanwhile, 28% of all institutions surveyed are currently investing in cryptocurrencies – and of these, nearly a third said they plan to increase their cryptocurrency allocations next year. Overall, 8% of all institutional investors surveyed – that is, all those who invest and do not currently invest in digital assets – plan to increase their allocations next year.
The combined total of assets managed by respondents is $ 12.3 trillion.
This year, a number of large fund and pension managers have started to venture into crypto, while many high profile investors known for their financial market acumen have also gotten involved. Many have said that digital assets like Bitcoin could be good hedges against inflation in a high incentive environment.
Although crypto is very volatile, it is not uncommon for different tokens to register huge gains. One index of the largest cryptocurrencies – the Bloomberg Galaxy Crypto Index – has added around 200% so far in 2021.
In the Natixis survey, around 40% said they recognize cryptocurrencies as a legitimate investment option, although central banks will eventually need to regulate them.
The dire predictions of its demise have been a constant for Bitcoin, the largest and most original cryptocurrency, since its inception just over a decade ago. Most have been in vain. Since entering mainstream consciousness, Bitcoin has jumped over 5,000% in the past five years.
The Natixis survey was conducted by CoreData Research in October and November and concerns 500 institutional investors in several countries. This includes four central banks, more than 20 sovereign wealth funds and more than 150 company pension plans.