Although the number of companies backing cryptocurrencies has increased, new data shows that most global institutional investors are not interested in exposing their digital assets.
A JP Morgan 2024 survey with more than 4,000 financial market participants shows that institutional investors are increasingly accepting Bitcoin and other cryptocurrencies. According to the participants, 78% of them do not plan to trade digital assets in the near future, which exceeds the same figure from a year ago.
Last year, 72% of investors said they would not add crypto assets to their portfolios. Many analysts have indicated that the lack of rigid regulations may be the reason for the declining percentage of favorable stakeholders. Compared to the previous year, when investors faced the FTX saga, only 9% of companies reacted positively to trading in digital assets. This is a slight increase of 1%.
As for the future, although 14% of companies that do not currently trade virtual assets responded positively in the previous year, none of them intend to open this branch in the next five years.
As a result of the 2023 survey. six percent of participants said they plan to start trading digital assets in the next 12 months. This year, twelve percent of companies showed interest in repeating digital asset trading.
twelve percent of the 4,000 traders looking to gain exposure to the market due to recent events see the cryptocurrency market as favorable, although the survey data shows a cautious stance.
In addition, the JP Morgan survey looked at another important trading technology; many firms pointed to artificial intelligence (AI) as a better solution than distributed ledger technology (DLT). Only 7% of respondents who voted for AI supported blockchain technology.
Analysts lament the repeated fraudulent activity of digital assets over the past two years as a barrier to mass adoption.
Institutional investors and traditional market players are staying away from the cryptocurrency market due to frequent hacks that cost them millions of dollars. The broader market lost $2 billion last year to fake cryptocurrency entities. This has sparked more discussion about the security of users’ resources.
In 2022, the collapse of Terra Network and the subsequent implosion of FTX swept millions out of the market, while attracting sectors to regulatory bottlenecks.
Regulators in the United States have filed numerous lawsuits against cryptocurrency companies for failing to comply with specific regulations. As a result, some companies have considered moving to other jurisdictions.
As a result of these market circumstances, traditional financial players have stopped investing. On the other hand, recent events, such as the approval of the Bitcoin ETF, have been moved to change the situation.
After the approval of Bitcoin ETFs by the United States Securities and Exchange Commission (SEC), many traditional investors gained a new investment window. As a result, there was an influx of money into the market.