Investment bank Goldman Sachs says institutional investors and asset managers are driven to bitcoin by “fear of missing out” (FOMO). Goldman now considers bitcoin to be a new asset class. Nonetheless, institutional investors are facing a number of strong barriers to entering the crypto market.
Asset Manager, Institute Facing Crypto FOMO
Goldman Sachs said on Monday that fears of the disappearance of potential profit (FOMO) from cryptocurrency among investors have boosted crypto prices over the past year. Goldman Sachs’ global head of digital assets Matthew McDermott said in a note to clients:
There is no doubt that ‘Fear of Missing Out’ (FOMO) is playing a role, given how much Bitcoin and other crypto assets have appreciated and how many interested parties of all tastes have jumped into this space.
While liquidity has increased in the crypto market recently, the analyst said, “It is still difficult for entities to gain access to the market, which is quite fragmented.”
If you are an asset manager or running a macro fund and your nearest competitor is investing all [in cryptocurrency] And seeing the material gains, your investors will naturally wonder why you are not investing [in the asset class].
McDermott continued to share key issues raised by Goldman’s customers, preventing them from increasing their exposure to bitcoin or other cryptocurrencies.
First, McDermott stated that “for corporate, increased participation often depends on whether their board feels that such participation makes sense given the nature of the company and its objectives.” The Goldman analyst reported that “some investment funds and asset managers do not have the right to invest a portion of their portfolio in crypto.”
The second hurdle is “how easily customers can enter the market, is there enough liquidity to meet their needs, and are they comfortable enough with the protection and security aspects of managing these assets?”
In addition, some clients question whether exposure to cryptocurrency is the right thing to do and whether it makes sense for their investment strategies, portfolio or balance sheet, the analyst elaborated. Nevertheless, he insisted:
As increased arrivals show, more and more entities are becoming comfortable with some exposure to the crypto space.
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