Should Institutions Worry About Crypto Winter? State Street says…

According to banking behemoth State Street, global asset managers are unaffected by the ongoing cryptocurrency “winter.” In what has been nicknamed a “crypto winter”, cryptocurrency prices have fallen on the back of interest rate hikes. In fact, Bitcoin has weakened by more than 50% since January.

However, the sudden influx of new financial products linked to the cryptocurrency boom would suggest that established participants expect the asset class to endure.

Irfan AhmadAsia-Pacific Digital Lead for the bank’s cryptocurrency arm State Street Digital, stressed that despite the market’s considerable volatility in June and July. Ino interview he said,

“During the June-July period where things heated up in terms of activity, we saw institutional clients not necessarily double, but they were not deterred from placing strategic bets on the asset class itself.”

Investors who come in with big numbers

The Cboe Australia stock exchange listed three exchange-traded cryptocurrency funds (ETFs) from Cosmos Asset Management and 21Shares in May. Meanwhile, asset manager Monochrome has just received approval to introduce the country’s first spot crypto ETF with an Australian financial services license in August.

The majority of Australian financial institutions have avoided cryptocurrencies because they consider them too dangerous, except for the Commonwealth Bank. Last year, it unveiled a crypto investment pilot that has since faced regulatory hurdles.

However, a few global juggernauts are investing in digital currencies. Last month, investment titan BlackRock unveiled a product that allows institutional clients exposure to Bitcoin, while Goldman Sachs introduced its first bitcoin-backed loan.

Referring to Goldman’s actions, Ahmad predicted that more significant institutional players are likely to enter the cryptocurrency market in the future. He said,

“Generally, our customers, they’ve been talking more pragmatically to us about how they might be able to launch products, or what our capabilities might be in the future to help them support the launch of those products.”

What do others think of the crypto winter?

The Cosmos Purpose Bitcoin Access ETF’s fund manager is State Street, and Ahmad told SMH that further cryptocurrency product launches are coming to Australia in the “very near future.

Analysts in the field argue that the recent fall in the Bitcoin market is not a problem unique to one industry. The situation surrounding digital tokens has become uneasy as a result of the decline in all financial markets.

Due to the volatility of cryptocurrency markets, buying cryptocurrencies at any price is risky, much less one that could become a long-term trend. Prices may drop more, leaving your investment in the red, or they may return to where they were.

The co-founder of automated cryptocurrency trading platform Coinrule believes that the same economic factors that hurt other economic sectors are to blame for the price decline of cryptocurrencies.

“It’s not just crypto that’s down, everything is down, and over the next 6-12 months the economic outlook is bad. The central banks are between a rock and a hard place about low economic growth and high inflation. So investors are getting away from ‘risk-on’ assets like crypto and tech stocks.”