Cryptocurrency as asset class does not exist for most large institutional investors

Cryptocurrency as an asset class actually doesn’t exist for most large institutional investors, Jared Gross, head of institutional portfolio strategy at JPMorgan Asset Management, said on Bloomberg’s “What Goes Up” podcast.

“The volatility is too high, the lack of an intrinsic return that you can point to makes it very challenging.” In the past, there has been some hope that bitcoin could become a form of digital gold or a safe haven asset that could provide protection against inflation. But it is “self-evident” that it hasn’t really happened, Gross said.

“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.”

Cryptocurrency prices rose in 2020 and 2021, thanks in part to a number of traditional financial players entering the market, or at least speaking out in support of it. This was an important development for crypto-enthusiasts, who saw this approach as a confidence in the nascent industry.

But this year, digital assets were hit hard as the Federal Reserve and other major central banks around the world raised interest rates to combat historic inflation.

 This less flexible environment has been bad for crypto. Bitcoin, the largest token, lost 60% of its value in 2022, and ether fell about 70%.