Sunday, November 27, 2022

8% of Institutional Investors Managing $12.3T AUM to Increase their Crypto Allocations Next Year

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These investors, including sovereign wealth funds and corporate pension plans, also see crypto assets as the “top contender” for a “major correction” in 2022.

Bitcoin price continues to struggle around the $50,000 level, giving no signs of where it wants to go next.

Quarter four started on a bullish note as we went from about $45k to a new all-time high of $69k in early November but only to fall back under $42,500 this month. Last week, Bitcoin wiped out all the gains made in the first half of Q4.

According to a survey, crypto assets are the “top contender” for a “major correction” in 2022. Three-quarters of institutions polled said crypto is not an appropriate investment for most retail investors.

The survey for Natixis Investment Managers was conducted by CoreData Research in October and November covering 500 global institutional investors, including four central banks, over 20 sovereign wealth funds, and more than 150 corporate pension plans.

As we reported, historically, a red November has resulted in a red December as well. And currently, the month is recording a negative 13.2% performance while Q4 performance is nearly 13% and YTD 70.7%.

The good thing is the interest and money in the crypto sector hasn’t stopped flowing in. Volume has also been seeing a jump, especially after the latest bout of volatility. Crypto exchange Bybit reported that its transaction volume reached $1.7 trillion in the past quarter while recording an increase of 77% in its number of users to 3 million in the past six months.

While expecting a correction, 28% of all institutions surveyed also said they are currently investing in crypto, while nearly a third of them plan to further increase it in 2022.

Overall, 8% of all institutional investors surveyed, collectively managing assets worth $12.3 trillion, plan to increase their crypto allocations next year. These investors include both who have deployed funds in crypto and those who haven’t.

Additionally, about 40% of respondents said they recognize crypto as a legitimate investment option though central banks will eventually need to regulate them.

Despite the ongoing turbulence, Brevan Howard Asset Management is also preparing to extend its push into crypto by launching a new multi-strategy hedge fund that will provide broad exposure to the booming ecosystem.

The investment firm is in preliminary talks with investors to raise money for the new fund that will be launched early next year, reported Bloomberg citing people with knowledge of the matter.

Besides investing in liquid cryptos, it will also look for relative-value and venture capital opportunities.

Longtime hedge fund manager Rob Citrone, managing about $2.4 billion, who invested in Bitcoin at $15,000 and sold his crypto earlier this year at $45,000, told investors at an event this week that he jumped back in after bitcoin fell to $30k in July.

Another fund interested in crypto is SoftBank. Paulo Passoni, managing director of SoftBank’s Latin America Fund said, about 10% of one of the firm’s $5 billion funds is invested in crypto-related assets.

According to him, it’s “obvious” the most attractive space to invest in Latin America is crypto.

And while there’s “some froth” in the market, he supports crypto investment and believes it’s “the most relevant thing going on around the globe right now.”

“There’s an old saying in investing — follow the talent — and the most talented people around the globe are going into crypto-related projects,” said Passoni at a webcast Wednesday hosted by Eurasia Group.



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