At a recent buy side event hosted by Profit & Loss and CME Group in New York, a panel of cryptocurrency experts discussed how institutional investors and traders should think about these assets within a portfolio.
Interest in cryptocurrencies has skyrocketed amongst investors and trading firms over the past year, as the market capitalisation for this nascent asset class has increased dramatically and volatile price action has offered the potential for outsized returns compared to many traditional asset classes.
Yet some firms still consider cryptocurrencies to be too risky to include in their portfolio, a position that Ari Paul, managing partner and CIO of the hedge fund BlockTower Capital, took issue with on the panel.
As cryptoassets continue to endure a tough bear market, Profit & Loss hosted an event called OnTheBlock to discuss what impact this has had on liquidity conditions.“Right now, we haven’t seen the wave of institutional money that everybody talked about in 2017,” said Martin Garcia, managing director at Genesis Trading. “The narrative then was very much that this is just the retail sector trading these assets and that when the institutional funds come in, it will grow to yet another scale.”To be clear, Garcia still thinks that institutional-sized money and liquidity will enter the crypto space, but that it will do so at a much slower and steadier pace than many were previously predicting.