Investments in Cryptocurrency Funds Could be Ideal of Public PensionsFebruary 19, 2019
In a world where there are one sect of cryptocurrency enthusiasts doing the job of cheerleaders for cryptocurrencies and yet another group dictating the obituary, a Boston-based financial consultancy states,
“Despite challenges, we believe it is worthwhile for investors to begin exploring this area today with an eye toward the long term. Though these investments entail a high degree of risk, some may very well upend the digital world.”
While we continue to be in the developing stage of the nascent cryptocurrency industry, the financial firm which advises only institutions with more than $300 billion worth in client assets has to state that,
“The dramatic declines that swept across the crypto space have raised concerns about the future of these assets and blockchain technology which underpins them. In looking across the investment landscape, we see that the industry is developing, not faltering.”
When discussing the reason for the steady influx of institutional investment in the cryptocurrency market, it is seen that institutional investments are increasing as coin prices are decreasing. This according to Grayscale is an encouraging sign. Major financial firms are seeing a potential for this trend to reverse.
The report from Grayscale declared cryptocurrency as a new type of asset class and further suggested that they might be playing a diversifying role in the investor portfolio of an average customer.
The report summarized the trend as follows:
“Despite a slowdown in investments across products in the fourth quarter, we continue to see sufficient evidence to support that digital assets are here to stay as a new asset class. Moreover, we believe in a future where several digital assets would survive, thrive, and complement each other in the digital economy.”
Two major public pensions like Virginia’s Police Officer’s Retirement System and the Employees’ Retirement System in Fairfax County invested in Morgan Creek in the new $40 million cryptocurrency fund.
“Blockchain technology is applied in unique and compelling methods across several industries. We feel it is crucial to be opportunistic and excited to participate in the emerging opportunity, due to the attractive asymmetric return profile, which it represents.”
No investment process is completely immune to the volatility of its asset class. Investors who have been around knowing that this is not a new phenomenon. Asset classes that endure and sustain their position in the market become the trendsetters. Bitcoin is already setting trends after sustaining deep falls. While amateur investors expected the price to go up and up forever, they have to deal with a situation of what they are to do next.
Capital inflows from institutional investors are considered to be a fundamental sign of perceived value, which in turn will dictate future price momentum.
Crypto is gaining recognition from major institutions as a promise to contribute to pensions, which is what an average Joe works out his whole life for.