Interestingly, when asked about their personal investments, 40% of them were actively trading cryptocurrencies.
A survey conducted at JPMorgan’s Macro, Quantitative and Derivatives Conference, attended by nearly 3,000 investors from nearly 1,500 institutions, found that nearly half of cryptocurrencies are called “rat poison” or a temporary fad.
Only 10% of institutional investment firms surveyed by JPMorgan trade digital assets. Of the remaining 90%, four out of five have no plans to enter those markets, at all.
Interestingly, when asked about their personal investments, 40% of them were actively trading cryptocurrencies, according to the survey released on Tuesday. As for fraud, 95% of those surveyed believe it is “fairly or fairly prevalent” in the crypto space.
Regulators are expected to get tougher in the emerging industry. Four-fifths of investors rely on stricter enforcement as the ecosystem matures and no longer has an excuse for incompatibility with other asset classes.
While JP Morgan and its partners are institutionally distancing themselves from the crypto markets, the investment bank is largely into blockchain technology. It has invested in blockchain-backed securities financing startup HQLAᵡ R3 Corda, has been testing cryptocurrencies with Bahrain prior to the CBDC project, and was the first to manage collateral using Baton Systems’ shared ledger.
Crypto assets have been under pressure since last week, with Bitcoin temporarily relinquishing the $30K level. Cryptocurrency market cap remains below the $1.5 trillion streak, with a few of the top 10 assets (Ripple’s XRP, Dogecoin, Polkadot and Uniswap) remaining down at least 25% compared to last week.
The downward spiral is said to have resulted from China’s deep crackdown on cryptocurrency mining and trading, but it is well known that the largely unregulated space has allowed retail traders to gain exposure at extremely high leverage, particularly in jurisdictions in the Asia-Pacific region.
“While this allows for larger gains in speculative trading, it also significantly accelerates losses,” said Natalia Honek, Head of Revenue at Advanced Markets.
“The type of volatility that we see in crypto assets is uncommon with respect to traditional financial instruments, and due to the combination of lower liquidity than traditional assets and higher volatility, excessive crypto trading has a greater chance of creating a cycle or trend, and ultimately driving the price of the crypto asset lower.” .
Michael J. Perry, the famous Perma Bear who became a short-selling real estate legend in 2007 and was portrayed by Christian Bale in The Big Short, recently warned that the “mother of all accidents” is coming.
“The problem with #crypto, as with most things, is leverage. If you don’t know how much leverage is in crypto, you don’t know anything about crypto, no matter how much you think you know.”