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Crypto is ‘effectively non-existent’ for large institutions, says JPMorgan’s Gross

(Bloomberg) — Fund managers who have avoided the many ups and downs of cryptocurrencies may feel relieved they did, according to a senior investment strategist at JPMorgan Asset Management.

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“As an asset class, crypto is effectively non-existent for most large institutional investors,” Jared Gross, head of institutional portfolio strategy at the bank, said on this week’s episode of the “What Goes Up” by Bloomberg. “The volatility is too high, the lack of an intrinsic return that you can point to makes it very difficult.”

In the past, there was some hope that Bitcoin could be a form of digital gold or a safe haven asset that could provide inflation protection. But it’s “obvious” that didn’t really happen, Gross said.

“Most institutional investors are probably breathing a sigh of relief that they haven’t entered this market and probably won’t be doing so any time soon.”

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Crypto prices have been rising in 2020 and 2021, driven in part by a number of traditional financial players entering the space or at least expressing their support. This was an important development for crypto enthusiasts, who viewed this kind of adoption as giving credence to the fledgling industry.

But digital assets have suffered badly this year as the Federal Reserve and other major central banks around the world have raised interest rates to combat historic inflation.

Such a less accommodating environment has been detrimental to crypto. Bitcoin, the largest token, lost 60% of its value in 2022, and Ether fell around 70%.

On Friday, Bitcoin was trading around $16,800, down from around $50,800 a year ago.

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