If there is one thing that is synonymous with the crypto market, it is the tendency for prices to rise and fall quickly. This volatility has been one argument for getting into cryptocurrencies but it is also one of the major reasons investors get into it. Its highly volatile nature makes it a perfect candidate for quick gains as long as investors are willing to risk it.
Recently, the market has experienced a crash that has seen major assets crumble under its weight. Most cryptocurrencies suffered value losses that they are still trying to recover from. However, according to money managers, the woes of investors may not be over as crypto is primed for some major correction in the coming year.
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Crypto Will Rule 2022
In a survey reported by Bloomberg, institutions had pulled into crypto majorly in 2021. The numbers included in the survey showed that about 28% of all institutions are currently invested in the crypto market in one way or another. Of this 28%, one-third revealed that they planned to increase their positions in the crypto space in the coming year.
Going further, money managers have said that the market is still primed for some “major correction” coming in 2022. This is despite the fact that a good number of institutional investors are putting money in crypto, in addition to 8% of firms surveyed, both those already invested and those not invested, said they will increase their investments in crypto in 2022.
Crytpo total market cap drops to $2.2 trillion | Source: Crypto Total Market Cap on TradingView.com
The money managers explained that the correction will come as a result of a big selloff next year. This comes after almost 75% of respondents in the poll said that cryptocurrencies were not an ideal investment option for retail investors.
40% Of Institutions Are Bullish
In the survey that was carried out for Natixis Investment Managers, CoreData Research found that 40% of institutions saw crypto as a legitimate investment asset. One thing that was constant was the need for regulation in the space. The survey included 500 institutional investors across multiple countries and players in the financial sector, including central banks, sovereign wealth funds, and corporate pension plans.
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The prediction from the money managers – who currently manage about $12.3 trillion in assets – could spell further downside for the crypto market. However, there is no way to tell if the market will swing in the way of this prediction. Cryptocurrencies have been known to have a mind of their own, proving predictions wrong on countless occasions.
The benefit of involvement from institutional investors in the market cannot be overestimated though. CEO of ARK Invest Cathie Wood said that it is increased participation from these institutional investors that will put Bitcoin towards the $500,000 mark.
Featured image from Biomedical Research and Therapy, chart from TradingView.com