Last year saw the institutions dismissing bitcoin and cryptocurrencies, with the premier example being when Jamie Dimon called bitcoin a fraud.
But the tide seems to be turning in 2018. Let’s see what’s going on.
It seems like every old school finance guy has spoken negatively about bitcoin and cryptocurrencies in the past year.
Consider Ray Dalio, who called it a speculative bubble. Or Paul Krugman, who said no one understands bitcoin. And there’s Charlie Munger, who called bitcoin total insanity.
Despite the negative sentiments, according to Morgan Stanley hedge funds still invested $2 billion into cryptocurrencies over 2017. With hedge funds having $3.2 trillion in assets under management there’s certainly more that can be invested into cryptos.
We’ve already seen some ETFs come into the market like BLOK and BLCN in the U.S. and HBLK in Canada. These, however, invest in public companies and not cryptos themselves.
Most notably J.P. Morgan released a report call Decrypting Cryptocurrencies which many are now calling the Bitcoin Bible. You can find a copy here.
The report concluded that cryptocurrencies are unlikely to disappear. Quite a turn of events from Jamie Dimon calling it a fraud.
They also like bitcoin as it’s not correlated to other assets. See the graphic below. According to JPMorgan adding a modest allocation to bitcoin would have improved portfolio efficiency over the past few years.
JPMorgan also mentioned a cryptocurrency ETF would be a holy grail for owners and investors in a similar way to how the GLD ETF transformed the gold market. Right now there’s about 10 bitcoin and Ethereum ETFs waiting for approval.
Finally, BlockRock recently released a report on cryptocurrency. The asset manager of $5.7 trillion in assets said it expects to see cryptocurrencies become more widely used as the markets mature.
What do you think, will we see more institutional money going into cryptocurrencies in 2018?
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