According to banking giant State Street, global asset managers are unfazed by the ongoing “winter” in cryptocurrency. In what has been dubbed a “crypto winter”, cryptocurrency prices have fallen due to rising interest rates. In fact, Bitcoin has depreciated over 50% since January.
However, the sudden influx of new financial products linked to the cryptocurrency boom suggests that established participants are counting on the asset class to last.
Irfan Ahmadthe Asia-Pacific digital manager for the bank’s cryptocurrency arm digital street state, pointed out that despite significant market volatility in June and July. In a interview he said,
“During the period of June, July when things got hotter in terms of activity, we saw institutional clients not necessarily doubling down, but they weren’t deterred from placing strategic bets on the asset class. herself.”
Investors come in with big numbers
The Cboe Australia exchange listed three cryptocurrency exchange-traded funds (ETFs) from Cosmos Asset Management and 21Shares in May. Meanwhile, asset manager Monochrome has just received approval to introduce the country’s first spot crypto-ETF with an Australian financial services license in August.
The majority of Australian financial institutions have shunned cryptocurrencies as they consider them too dangerous, with the exception of Commonwealth Bank. It unveiled a crypto-investment pilot last year that has since encountered regulatory hurdles.
However, a few global behemoths are investing in digital currencies. Last month, investment titan BlackRock unveiled a product that gives institutional clients exposure to Bitcoin, while Goldman Sachs introduced its first Bitcoin-backed loan.
Ahmad referenced Goldman shares and predicted that other major institutional players would likely enter the cryptocurrency market in the future. He said,
“Certainly our customers have spoken to us in a more pragmatic way about how they might launch products or our future capabilities to help them support the launch of those products.”
What do others think of crypto winter?
The fund administrator of the Cosmos Purpose Bitcoin Access ETF is State Street, and Ahmad told SMH that additional cryptocurrency product launches will be coming to Australia in the “very near future.”
Analysts on the ground say the most recent Bitcoin market slump is not a problem unique to one industry. The situation around digital tokens has become tumultuous due to the decline of all financial markets.
Due to the volatility of the cryptocurrency markets, buying cryptocurrencies at any price, let alone one that could become a long-term trend, is risky. Prices may fall further, leaving your investment in the red, or they may return to where they were.
The co-founder of cryptocurrency auto trading platform Coinrule believes that the same economic factors hurting other economic sectors are to blame for the drop in cryptocurrency prices.
“It’s not just crypto that’s down, everything is down, and over the next 6-12 months the economic outlook is poor. Central banks are between a rock and a hard place in the face of slow economic growth and high inflation. Thus, investors escape “risky” assets like crypto and tech stocks.