According to Bloomberg’s senior commodity strategist Mike McGlone, the career risk associated with cryptocurrency is shifting to money managers who have no exposure to digital assets, rather than those who already invested. This reflects a dramatic shift in institutional acceptance of Bitcoin (BTC) and decentralised finance.
The November issue of Bloomberg’s Crypto Outlook referred to 2021 as “simply another foundation year” for the cryptocurrency industry, emphasising the digital assets’ long-term value proposition. Money managers “run the danger of slipping behind and underperforming peers who possess crypto assets” in this climate, according to McGlone. He elaborated:
“Our chart shows the Bloomberg Galaxy Crypto and DeFi indices outperforming the S&P 500 by more than 200% in 2021.”
Crypto has significantly more volatility than traditional investments. Nevertheless, selloffs in assets like Bitcoin and Ether (ETH) “appear to be drawing responsive purchasers. Most of whom risk falling behind by shunning crypto allocations”.
In today’s market the typical 60–40 portfolio is no longer enough
McGlone went on to say that “managers are likely to spot large trends ahead of the masses”. Which is far more difficult if they use typical portfolio techniques like allocating 60% to stocks and 40% to bonds. Additionally, many investment managers have warned that in today’s market, the typical 60–40 portfolio is no longer enough.
McGlone correctly forecasted the early phases of Bitcoin’s fourth-quarter breakthrough. He claimed that the $50,000 resistance had likely shifted to support, according to a report from early October. Besides, the expert predicted that $100,000 BTC would be achievable by 2021. A prediction that was echoed in the most recent research.
The leading cryptocurrency’s value is now at $62,080. In October, Bitcoin reached a high of almost $67,000 before falling.
Investment managers and financial advisers are likely to play a bigger role in the cryptocurrency market, according to Grayscale’s Michael Sonnenshein, Amber Group’s Jeffrey Wang and Tyr Capital’s Edouard Hindi.
“Now custodial and regulatory hurdles are steadily falling. Hence, the impression that ‘fiduciary standards’ remain a difficulty in publicly advocating for the asset class to be included in consumers’ portfolios might still be preventing a larger acceptance of crypto by financial advisers.”