- Some of the top money managers and institutions surveyed believe that cryptocurrencies are "the top contenders" for the correction in 2022.
- But at the same time, some institutional players have also shown their willingness to increase exposure to digital assets.
The cryptocurrency market has recently given investors a taste of massive volatility after a big bull run earlier this year. Now some money managers believe that the crypto market is set for a sell off in the upcoming year 2022.
According to the survey by Natixis Investment Managers, digital assets are currently the "main competitor" for a "major correction" in 2022. Almost three-quarters of the institutions surveyed indicated that cryptocurrencies are not suitable investment options for retail investors. . The combined total of all assets managed by respondents totals $ 12.3 trillion.
CoreData Research conducted this survey on behalf of Natixis in October and November. It covers 500 institutional investors in various countries. This includes 20 sovereign wealth funds and more than 150 corporate pension plans.
However, in the Natixis survey, 40 percent of institutions also recognize digital assets as a legitimate investment option. But at the same time, they believe that the central bank will eventually need to regulate them.
The broader crypto market has rebounded tremendously this year in 2021, adding more than $ 1.5 trillion to market capitalization. However, the cryptocurrency market has been largely volatile for the past two weeks with some of the major cryptocurrencies testing their key support levels.
Over the past two weeks, more than $ 500 billion in investor wealth has eroded from the crypto space. Bitcoin (BTC) and other cryptocurrencies have corrected between 10 and 30 percent recently.
Institutions interested in increasing crypto exposure
What's interesting is that institutional players have been moving in large numbers into the crypto space. Of the total institutions surveyed by Natixis, 28 percent have already invested in crypto. Also, a third of them said they plan to increase their exposure to cryptocurrencies next year.
This year in 2021, we have seen several traditional financial institutions start to dabble in cryptocurrencies. It includes some of the large fund managers, as well as pension funds. In addition, other popular investors of great popularity in investment circles have also dabbled in cryptocurrencies. Cryptocurrencies like Bitcoin are believed by many to serve as a good hedge against inflation in this environment of intense stimuli.
Precisely, cryptocurrencies could serve as a better hedge against inflation, but one must remember that the market has been largely following movements in world stock markets. The recent correction in crypto also aligned with the correction in global stocks.
In a word with CNBC, Goldman Sachs CEO David Solomon said the same returns are not expected in stocks in the next few years. He additional:
Hopefully, we won't see the same rate of return on stocks and many other assets over the next several years as we've seen in the last two years. I have been involved in various investment committees and charitable foundations, college boards, etc., and certainly my way of thinking is that the returns that we have received over the last three to five years are different than what we should expect as we move forward. .
Therefore, there is the same possibility that the cryptocurrency market will move sideways for a very long period of time, as we had seen in the period from 2018-2020.
