A Japanese analyst says that institutional investors are growing increasingly crypto-keen – and believes that the coronavirus pandemic will only serve to heighten their interest.
Per Fisco, via Gentosha, popular Japanese blockchain and crypto author and analyst Tetsuyuki Oishi says that pre-coronavirus investment figures from brokers dealing in crypto funds show interest in crypto funds was growing fast among institutional investors in the months and weeks before the pandemic began to spread outside China.
And while the outlook for most asset classes is now negative, to say the least, “total” pessimism need not be applied in the case of crypto.
The analyst gave reasons for his hypothesis, stating that firstly, the pandemic is set to reduce demand at many companies, resulting in long-term declines in corporate profits. Most analysts believe that stock prices will struggle to pull off an unlikely V-shaped recovery. As such, investors will need to find ways to invest in assets other than stocks – as investors will be very reluctant to keep their holdings in fiat bank accounts and let them “sleep.”
Secondly, he states that there is still only a limited amount of correlation between cryptoassets and conventional assets. In the early stages of the pandemic, all sorts of asset classes were sold off, including bitcoin (BTC). However, they have since picked up. With fiscal uncertainty on the rise in Japan and elsewhere as a result of the pandemic, investors will be on the lookout for asset classes that have little or no correlation with conventional assets.
And finally, the analyst believes that the search for uncorrelated assets will naturally lead investors – no matter how crypto-skeptic they have been in the past – to pastures new, namely cryptocurrency and “especially bitcoin.”
The claims give further credence to claims that investors are beginning to lose faith in traditional markets. Last week, economics experts told the Daily Telegraph that only “delusional markets are still betting on a V-shaped recovery” that “could not possibly happen.”
Stock market investors, warned professor Anthony Costello of University College London, were living in “in cloud-cuckoo land” if they were anticipating a quick return to trading as usual.