More than 50% of institutional investors in cryptocurrencies expect a correction in 2022
Natixis Investment Managers, an asset manager with $1.39 trillion in assets under management, published a global report involving 500 institutional investors from 29 countries across North America, Latin America, the UK, Continental Europe, Asia and the Middle East.
According to the report, most institutions see Bitcoin and other cryptoactives losing earnings in 2022.
“Given all the factors at play, institutions see the potential for corrections in a range of asset classes and sectors. Hugely popular cryptocurrency tops the list with more than half of institutions calling for a correction. This is followed by interest-rate-sensitive bonds (45%), stocks (41%) and technology (39%).”
The report found that despite the forecast of a downturn in the cryptocurrency market, institutional investors are nevertheless warming up to the idea of holding digital assets.
“Four in ten consider crypto to be a legitimate investment option, and of the 28% who invest in crypto, 90% say they will maintain (62%) or increase (28%) their allocation.”
However, the vast majority of respondents believe that cryptocurrencies need more regulation before gaining wider acceptance. According to the survey:
- Jordan Belfort, “The Wolf of Wall Street,” believes XRP will hit $10
- “China was right to ban cryptocurrencies”, says billionaire and Warren Buffett partner Charlie Munger
- Nassim Taleb takes advantage of the fall to criticize Bitcoin: “It’s not for protection, it’s not a currency, it’s nothing”
“To attain broader acceptance, it’s thought they will need additional scrutiny, and nine out of ten predict that central banks will have to regulate cryptocurrencies. Few see the potential for crypto to replace reserve currencies (25%) or fiat currencies (28%). However, one-third believe crypto has the potential to level the playing field for developing nations. Just 29% think that emerging market countries should consider crypto as legal tender. ”
Every market is made up of cycles. No euphoria lasts forever, because we know that there are moments of exaggeration. Generally, people tend to overestimate a technology short-term potential while underestimating its long-term potential.
In a completely new market like crypto, pricing is even more difficult and distortions are common.
Cryptocurrencies are known to be extremely volatile assets, and it’s true, high profits come with big risks. But the 5 stages of a cycle are present in all types of markets: euphoria, depression, hope, optimism and belief.
Because of Bitcoin halving, however, this cycle becomes more evident in the crypto market. Every four years, BTC issuance drops by half and the perception of scarcity influences investors. However, when entering the next phase of the cycle, the climate will cool down.