60% of super-rich family offices own crypto or are interested as inflation soars, Goldman Sachs says

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Cryptocurrencies have boomed in 2021, despite a recent plunge.

  • 60% of family offices have already invested or are interested in crypto, Goldman Sachs has found.
  • Many investment firms of the rich increasingly see crypto as a hedge against inflation, the survey said.
  • Yet others remain concerned about cryptocurrencies’ volatility and the safety of the market.
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The investment firms of the super-rich are increasingly interested in cryptocurrencies, a survey by Goldman Sachs has found, with 15% already having bought in and 45% saying they could well do in the future.

Goldman said in a report on Wednesday that many respondents said they were considering cryptocurrencies “as a way to position for higher inflation, prolonged low rates, and other macroeconomic developments following a year of unprecedented global monetary and fiscal stimulus.”

The bank surveyed 150 family offices – investment firms that look after the wealth of the very rich.

Interest in cryptocurrencies such as bitcoin varied from region to region. Goldman found 24% of family offices in the Americas had put some money in the space already, compared to just 8% in Asia and 8% in Europe, the Middle East and Africa (EMEA).

In Asia, 68% of family offices said they are interested in investing in the future, compared to 39% in the Americas and 35% in EMEA.

Read more: WATCH: Crypto analyst David Grider and venture capital investor Ria Bhutoria discuss state of the market, under-the-radar altcoins, and outlook on regulation

Goldman said digital assets were mentioned as one investment solution by those concerned about inflation. Around 40% of respondents said they were concerned about monetary debasement as central banks pump money into economies, with more than 40% of this group saying they would consider buying digital assets.

However, 39% of family offices around the world said they were not interested and would never invest in crypto. Of these, 49% said cryptocurrencies, which are highly volatile, were not a good store of value. Just shy of 40% said they were not currently comfortable with the infrastructure, such as trading and storing.

Family offices are a growing force in the investing world, thanks in large part to the boom in billionaires. Of the 150 firms surveyed by Goldman, 22% managed $5 billion or more and 44% managed between $1 billion and $4.9 billion.

Goldman’s report said: “Our conversations with family offices indicate they are interested in getting exposure not only to cryptocurrencies but also to innovation in the digital assets ecosystem.”

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TP ICAP and Fidelity are launching a crypto exchange for big players – a sign that institutional interest is sticking

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Bitcoin shot up in the first months of 2021 before tumbling in May.

  • TP ICAP is launching a crypto exchange aimed at big players such as hedge funds and investment banks.
  • The major financial broker has teamed up with Fidelity and Standard Chartered-backed Zodia Custody.
  • It is a sign that institutional interest in bitcoin and crypto is sticking, despite the fall in prices.
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Market infrastructure company TP ICAP is launching a cryptocurrency exchange aimed at investment banks, hedge funds and other financial institutions, in a sign that big players are still keen on digital assets despite the recent plunge in prices.

Fidelity Digital Assets and Zodia Custody, which was launched by Standard Chartered, have also backed the project and will provide custody services, the companies said Tuesday.

“Client demand to trade spot crypto assets is significant and growing,” said Simon Forster, co-head of digital assets at TP ICAP, cited in the companies’ announcement. “But to date many of our clients have been prevented from accessing crypto asset markets due to current limitations in market infrastructure.”

It is a sign that major players in financial markets remain interested in crypto assets, despite bitcoin’s slide from close to $65,000 in May to around $35,660 on Tuesday.

Institutional investors are put off by the design of crypto exchanges where trading and storage are done in the same place, TP ICAP said.

It hopes its new crypto-trading platform will appeal to big players by giving them access to liquid trading in bitcoin, ether and other crypto tokens, as well as storage for their assets at separate custodians.

TP ICAP, a global company that facilitates transactions between financial institutions, said the trading platform will be made available to its customers around the world. It will aim to provide the market standards and trading infrastructure viewed as a minimum in traditional markets, it said.

Fidelity sees the joint effort as key to bringing more big players on board with crypto assets. “Collaborating with industry leaders like TP ICAP to bring to market innovative solutions that strengthen the digital assets ecosystem is critical to enabling even more institutional participation,” said Chris Tyrer, head of Fidelity Digital Assets in Europe.

The new platform has already started to onboard customers, but its operation is subject to approval by the Financial Conduct Authority in the UK, where TP ICAP is based.

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Bitcoin is still driven by the ‘digital gold narrative’ among institutional clients who see it as a hedge against inflation, Fidelity’s digital assets president says

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  • Institutional investment in bitcoin is still driven by the “digital gold” narrative, according to Tom Jessop.
  • Jessop, Fidelity’s digital assets president, said his clients are worried about monetary inflation and see bitcoin as a hedge.
  • Bitcoin is also viewed as a “long-dated call option on the use of the asset or the technology as a means of payment.”
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Bitcoin is still driven by the “digital gold narrative” among institutional investors who see the digital asset as a way to hedge against inflation, according to Tom Jessop, Fidelity’s digital assets president.

In an interview with CNBC on Tuesday, Jessop was asked which narrative surrounding bitcoin is the most popular with institutional investors.

The digital assets president said: “I would say the predominant narrative at this point is still the digital gold narrative which really started driving the market higher about a year ago after the pandemic.”

He added: “There are a number of clients that are concerned about the fiscal and monetary stimulus, monetary inflation, and they see a scarce digital asset like bitcoin, specifically, being an important part of that thesis.”

Bitcoin’s scarcity and potential to hedge against inflation are key reasons institutions are taking an interest in the asset, according to Fidelity’s digital assets president, but they aren’t the only ones.

In his interview, Jessop explained how a growing number of institutional investors are looking at bitcoin “from an asset allocation standpoint” due to its lack of correlation with other assets over longer periods of time.

Jessop also said that bitcoin is seen as a “network effect opportunity” by some institutional clients. He explained that a portion of his clientele views the digital asset as a “long-dated call option on the use of the asset or the technology as a means of payment.”

Fidelity’s digital assets president went on to say that he believes bitcoin’s recent boom and bust cycles “are part of the maturation of bitcoin as an asset class.”

Jessop also echoed comments from other crypto analysts who have called bitcoin’s recent fall a result of massive leverage unwinding.

“In some cases, we touched close to $30 billion of leverage driving prices higher, and in many cases, these investors can trade on 50 to 100 times leverage…in the subsequent weeks that leverage has come down significantly, in some cases by two thirds,” Jessop said.

The digital assets president added that this de-leveraging process can be viewed as a “cleansing” for the ecosystem and that he expects with “basing” and “positive news flow,” bitcoin and other cryptocurrencies will begin to stabilize.

Read more: Financial researcher Nik Bhatia explains why asset managers with a growth focus could be violating their fiduciary duty if they don’t consider bitcoin – and compares the crypto to Amazon’s stock 20 years ago

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$14 billion hedge fund Brevan Howard set to start buying cryptocurrencies, as institutional interest booms

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Bitcoin’s huge price rises have drawn in traditional investors.

Brevan Howard, one of Europe’s largest hedge funds, is set to become the latest big-name investor to start buying cryptocurrencies.

The $13.7 billion fund’s managers have decided the cryptocurrency market has matured sufficiently to start investing for its clients, according to a person familiar with the matter.

Brevan Howard has set up a new fund which will start to invest in digital assets, the person said. It will be overseen by crypto investment firm Distributed Global’s co-founders Johnny Steindorff and Tucker Waterman.

The person said the hedge fund is looking to invest in a range of assets, not just bitcoin. Bloomberg, which first reported the news, said Brevan would initially invest up to 1.5% of its main $5.6 billion fund in cryptocurrencies.

The hedge fund already has some exposure. It bought a 25% stake in One River Asset Management, which runs a number of cryptocurrency funds, in 2020.

Co-founder Alan Howard has backed companies including British bitcoin payments app Bottlepay and has been an investor in Distributed Global since 2018.

Hedge fund bosses including Mike Novogratz and Paul Tudor Jones have made lucrative bets on the digital assets. Companies including Tesla, BlackRock and JPMorgan are getting involved.

Hedge funds focusing on cryptocurrencies have been the star performers of the industry in 2021.

Data from Eurekahedge on Wednesday showed crypto funds gained 116.8% in the first quarter, outstripping bitcoin’s 104.2% return. Global hedge funds were up 4.8% in the first 3 months of the year.

Bitcoin, the world’s biggest cryptocurrency, hit an all-time high close to $65,000 on Wednesday ahead of the $100 billion public listing of crypto exchange Coinbase on the Nasdaq.

The massive price rise has drawn in some of the biggest names on Wall Street. BlackRock has given two of its funds permission to invest in crypto derivatives, while Goldman Sachs has restarted its crypto trading desk.

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First North American bitcoin ETF soars past $1 billion under management as interest in crypto booms

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US regulators are yet to approve bitcoin ETFs.

  • North America’s first bitcoin ETF has soared past the $1 billion assets under management mark.
  • The Purpose bitcoin ETF, ticker BTCC, is reaping rewards from being the first to launch in Canada.
  • US regulators are yet to approve an ETF, but major firms are vying to be the first to launch.
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The first bitcoin ETF in North America has soared past $1 billion in assets under management after just two months in operation, as the crypto boom sends potential buyers piling into the innovative product.

Canada’s Purpose bitcoin exchange-traded fund, with the ticker BTCC, had $1.1 billion (C$1.38 billion) under management as of Tuesday, according to its website.

Its bitcoin holdings have soared over the last month from 13,128.56 on March 12 to 17,493.55 on April 13, crossing $1 billion in value this week. Over that time, the price of bitcoin has risen sharply to hit an all-time high of more than $64,000 on Wednesday.

Regulated financial products such as the Purpose bitcoin ETF have become a key way for investors to access the world’s biggest cryptocurrency, leading to a surge in interest.

Canada became the first major economy to approve a bitcoin ETF in March, with Purpose’s product first to launch. It was an instant success, with more than $165 million in trading volume on the first day.

US regulators are yet to approve a bitcoin ETF and have been historically reluctant to do so. But a number of firms – including Fidelity, VanEck, and most recently Mike Novogratz’s Galaxy Digital – are vying to be the first to launch.

Michael Sonnenshein, chief executive of Grayscale, which runs the biggest bitcoin fund in the world, told Insider in March he thinks it’s a “matter of when, not if” US regulators give the green light.

Grayscale said earlier in April it is 100% committed to converting its flagship Grayscale Bitcoin Trust, which had $40.5 billion under management on Tuesday, into an ETF.

Growing interest from major institutions has been a key factor in the latest rally in bitcoin, which has more than doubled in 2021. The likes of JPMorgan, Morgan Stanley, Mastercard and Tesla are now getting involved with cryptocurrencies.

Crypto exchange Coinbase’s direct listing on the Nasdaq, due Wednesday, is the latest sign of maturity in the bitcoin market, with talk of a $100 billion valuation.

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JPMorgan launches ‘crypto exposure basket’ featuring MicroStrategy as Wall Street interest in bitcoin grows

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A growing number of institutions are warming to bitcoin.

  • JPMorgan’s new product will give buyers exposure to big bitcoin players like MicroStrategy and Square.
  • It is a sign of growing interest in cryptocurrencies on Wall Street, with BlackRock and Goldman also moving in.
  • JPMorgan’s product will also provide exposure to Riot Blockchain, Nvidia and PayPal.
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JPMorgan is launching a product to give investors exposure to cryptocurrencies, in the latest sign that bitcoin’s meteoric rise is drawing widespread interest on Wall Street.

An SEC filing on Tuesday by the bank showed it is creating a “basket of companies with exposure to cryptocurrency” that will be dominated by MicroStrategy, Square, Riot Blockchain and Nvidia.

MicroStrategy has over 90,000 bitcoins on its balance sheet, worth upwards of $4.9 billion based on Wednesday’s bitcoin price, while Square owns more than 8,000 bitcoins. Riot is focused on crypto mining, while Nvidia’s technology is commonly used in this activity.

The companies’ shares often move as the bitcoin price rises or falls. JPMorgan will create debt products linked to the performance of the crypto basket, giving investors indirect exposure to the cryptocurrency market.

However, JPMorgan’s filing stressed “the notes do not provide direct exposure to cryptocurrencies and the performance of the basket may not be correlated with the price of any particular cryptocurrency, such as bitcoin.”

MicroStrategy will make up 20% of the crypto exposure basket, Square 18%, Riot 15% and Nvidia 15%. PayPal, Advanced Micro Devices, and CME Group, which are all linked to bitcoin exchanging or mining, are also in the basket.

The notes – essentially fixed-income products that do not pay interest – will come in denominations of $1,000 and payments will become due in May 2022. There will be a deduction of 1.5% from any gains, in effect a fee.

So if the companies in the basket gained 20%, investors would receive 18.5% on a $1,000 investment, amounting to $1,185.

JPMorgan’s creation of a crypto basket is more evidence of the growing allure on Wall Street of bitcoin, which has climbed more than 80% in 2021.

Goldman Sachs is restarting its crypto trading desk, and found in an internal survey of nearly 300 clients that 40% had exposure to cryptocurrencies.

BlackRock, the world’s biggest asset manager, has said two of its funds can invest in bitcoin futures, while BNY Mellon has announced intentions to manage cryptocurrencies.

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78% of institutional investors are not planning on investing in cryptocurrencies, though a majority say crypto is ‘here to stay,’ JPMorgan survey finds

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  • A JPMorgan survey of 3,400 institutional investors shows a majority do not plan to invest in or trade cryptocurrencies. 
  • However, 58% of investors surveyed said cryptocurrencies are “here to stay.”
  • The survey is the latest look into institutional sentiment on cryptos as more firms enter into the space.
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An overwhelming majority of institutional investors surveyed by JPMorgan said they do not plan to start investing or trading cryptocurrencies, though 58% said crypto is “here to stay.”

In a survey of roughly 3,400 investors representing 1,500 institutions around the work, 11% of investors said their firm either trades or invests in crypto, while 89% said their firm doesn’t.

Out of the investors who answered “no,” 78% of investors said it’s “not likely” their firm will trade or invest in crypto, while 22% answered “likely.”

The survey sheds a light on the state of institutional investor interest in cryptocurrencies. While bitcoin’s parabolic rise has garnered the attention of institutional and retail investors alike, the institutional community remains somewhat divided on the future of crypto. 

When asked: “What is your opinion on Crypto?” 14% answered “probably rat position squared (something to avoid,)” while 7% said it “will become one of the most important assets.” 58% of investors said it’s “here to stay,” and 21% answered that crypto is just a “temporary fad.” 

Almost all investors (98%) said they believe fraud in the crypto world is “somewhat” or “very much prevalent.” 

Multiple well-known Wall Street behemoths are taking in interest in cryptocurrencies and bitcoin. Most recently, a unit of Morgan Stanley said it’s exploring whether to invest in cryptocurrencies, according to Bloomberg. Morgan Stanley also has a 10.9% stake in MicroStrategy, which gives the bank indirect exposure to 7,681 bitcoin. 

BlackRock has authorized two of its funds to invest in bitcoin futures, while JPMorgan strategists have a theoretical price target of $146,000 for bitcoin.

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