Investment bank Goldman Sachs says institutional investors and asset managers are driven to bitcoin by â€œfear of missing outâ€ (FOMO). Goldman now considers bitcoin a new asset class. Nonetheless, institutional investors are facing several strong barriers to entry into the crypto market.
Asset Managers, Institutions Facing Crypto FOMO
Goldman Sachs said Monday that the fear of missing out (FOMO) on potential gains from cryptocurrencies among investors has pushed crypto prices higher over the past year. Mathew McDermott, Goldman Sachsâ€™ global head of digital assets, said in a note to clients:
While liquidity has increased in the crypto market recently, the analyst said â€œitâ€™s still difficult for institutions to gain access to the market, which remains quite fragmented.â€
McDermott proceeded to share key issues that Goldman clients have raised regarding whatâ€™s preventing them from increasing exposure to bitcoin or other cryptocurrencies.
Firstly, McDermott said that â€œFor corporates, increased involvement often depends on whether their board feels such involvement makes sense given the nature of the company and its objectives.â€ The Goldman analyst pointed out that â€œSome investment funds and asset managers donâ€™t have the authority to invest a portion of their portfolios in crypto.â€
The second barrier concerns â€œHow easily can clients gain exposure to the market, is the liquidity sufficient to meet their needs, and are they comfortable enough with the custody and security aspects of managing these assets?â€
In addition, some clients question whether having exposure to cryptocurrencies is the right thing to do and whether it makes sense for their investment strategies, portfolios, or balance sheets, the analyst detailed. Nonetheless, he emphasized:
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