Institutional investors have lost interest in cryptocurrencies after 2022, according to Northern Trust’s head of digital assets and financial markets, and despite this year’s upward trend, appetite for cryptocurrencies has yet to return. .
Justin Chapman told CNBC’s “Crypto World” at the Digital Assets Week conference in San Francisco that while the institution is shifting its focus to the blockchain technology that underpins cryptocurrencies, it’s not clear that customers’ loyalty to cryptocurrencies is growing. His company “has the capability” if interest is restored.
“Shortly after March, the cryptocurrency market fell off a cliff…Customer interest definitely fell off the same cliff as institutional interest in cryptocurrencies,” he said.
“From 2022 onwards, from an organization’s perspective, it’s definitely quiet now,” he continued. “Before that, we had seen traditional fund managers trying to launch ETPs in Europe, crypto funds equivalent to US ETFs, but it has really quieted down. Hedges are pretty active in the market. Even the fund has certainly reduced its exposure within that particular space.”
Meanwhile, leaders from the largest financial institutions gathered at a conference in San Francisco were buzzing about blockchain technology, especially its potential to help tokenize real-world assets like gold for their customers. .
Chapman said the “evolution of technology” has moved to a “better place” in terms of support from market participants.
“As a company, we have functions that sit there to manage [crypto trading] It’s working, but it’s a fairly quiet market at the moment, [after] “Most of the problems that occurred last year have yet to see an institutional recovery.”
Specifically, Northern Trust partnered with Standard Chartered in 2020 to launch Zodia, an institutional crypto custodian.
Bitcoin is up almost 75% this year after falling 64% in 2022. While the banking crisis has helped push the price of Bitcoin higher, a regulatory crackdown in the US is casting a shadow over the industry. Both brought volatility to the market. Bitcoin is currently struggling to break out of the $30,000 level, but investors agree that Bitcoin remains in a long-term uptrend.
“We don’t have a lot of focus on asset classes because our clients aren’t at the moment,” Chapman said. As such, we can describe their abilities, but they certainly have lost their luster from an institutional point of view.”