A number of asset managers have cautioned about investing in cryptocurrencies, including UBS Wealth Management, Pimco, T. Rowe Price, and Glenmede Investment Management. “We expect more stringent policy and regulatory controls ahead for crypto as it becomes more mainstream,” said UBS.
Asset Managers Caution of Crypto Investing
A number of asset managers have expressed caution on cryptocurrency after the recent price swings, including UBS Wealth Management, Pimco, T. Rowe Price, and Glenmede Investment Management, the Financial Times reported Monday.
UBS Wealth Management explained that the price volatility that followed the Tesla bitcoin announcement “highlights risks companies face if they take on crypto balance sheet exposure.” The bank added:
We expect more stringent policy and regulatory controls ahead for crypto as it becomes more mainstream.
Last week, Bitcoin News reported that UBS, the largest bank in Switzerland, was exploring offering cryptocurrency services to its wealthy clients.
Pimco’s Nicholas Johnson, a portfolio manager focusing on commodity, quantitative, and multi-asset strategies at Pacific Investment Management Company (PIMCO), questioned the using bitcoin to hedge against inflation. “This idea that crypto is an inflation asset is curious. Inflation assets underperformed in recent years while cryptocurrencies did very well. People are looking for a reason to justify why crypto has gone up,” he opined.
Rob Sharps, president and head of Investments at T. Rowe Price told the publication: “Crypto has an impact across capital markets, and we’re capital markets experts. Ultimately, the mandates we manage for clients are not well suited for investing in cryptocurrencies, and we recognize the high level of speculation in this space.”
Jason Pride, Glenmede’s Chief Investment Officer for Private Wealth, was quoted as saying that “The volatility of crypto is stratospherically high and we often see that, when equities sell off, so does bitcoin and that means it is not a good portfolio diversifier.” He further described:
Our stance with clients is the 10-foot pole rule: stay away from it. I don’t think the Fed and other regulators are fans of the current market structure for cryptocurrencies.
Tom Jessop, head of digital assets at Fidelity, noted that we are still in the early stage of development in cryptocurrency. “We refer to bitcoin as an aspirational store of value and it’s an adolescent in terms of its development due to the extreme volatility. Some investors are willing to accept the volatility as they see bitcoin as a long-term venture opportunity,” he said. Jessop recently said that we will continue to see bitcoin adoption at “an accelerated pace.”
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