Crypto is “in the early stages” of a “long-term uptrend”: analyst

The vast majority of fund managers remain cautious about investing in cryptocurrencies, despite some large investors putting their money behind digital coins, according to an analyst.

Speaking at Yahoo Finance’s All Markets Summit Plus, Fairlead Strategies Founder Katie Stockton said crypto adoption is only in its “very early stages” with institutional money being limited in space.

We’re sort of at the lower end of that curve, aren’t we? It could accelerate upward, ”she said. “This applies not only to individuals, but also to institutions, especially pension funds which are a source of major assets. Really that haven’t been widely deployed in cryptocurrencies now.

More than half of the world’s largest banks are now exposed to crypto, whether through direct or indirect investments in digital currency and blockchain-related projects, according to Blockdata. But more conservative wealth managers, including national and local pension funds, have largely remained on the sidelines, concerned about the price volatility and regulatory uncertainty that is clouding the industry.

Earlier this month, two public pension funds in Virginia announced that they were seeking approval for a $ 50 million investment in a fund that buys digital tokens and cryptocurrency derivatives, thus becoming one of the few pension funds to publicly announce that they are launching.

“I think when we get there we’ll see that more liquidity and tighter spreads, if you will, will influence them in a positive way, so there will be less volatility,” Stockton said. “But we’ve found that by using the charts and technical indicators at our disposal, cryptocurrencies really care about support resistance levels. So, while there is expected volatility, we have ways of managing risk to manage these short-term fluctuations by identifying key levels and combining them with metrics that measure things like momentum and readings. overbought.

Adoption among retail traders has accelerated at a faster rate, particularly during the COVID-19 pandemic. The price of bitcoin alone has increased nearly 500% since March 2020. The ease with which investors can now buy digital coins, through platforms like Coinbase (COIN), Paypal (PYPL) and Robinhood (HOOD), also led to increased exposure. A recent University of Chicago study found that 13% of Americans traded cryptos in the past 12 months, compared to 24% who invested in stocks.

Regardless of adoption rates, Stockton sees a “long-term uptrend in crypto.” Despite a recent sell-off triggered by the Chinese central bank banning all crypto transactions and fears surrounding the Chinese real estate market, Stockton said crypto assets held at key resistance levels, signaling support in the market.

“Bitcoin has tended to outperform when they collectively decline and [crypto assets] tend to stay in the direction of the pace, ”she said. “So while you can still find sources of outperformance and underperformance, you will find that most [coins] are all up on the same day and all down on the same day and I think that’s something we can count on.

Akiko Fujita is a presenter and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita

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