[ I N D E P T H | C R Y P T O ]
“ There are several large banks who are offering crypto services and they appear to be gaining traction from some asset managers – but these are early tentative steps .”
CARL JAMES , GLOBAL HEAD OF FIXED INCOME TRADING , PICTET ASSET MANAGEMENT
“ There is a huge infrastructure of law , regulation , due diligence and more that asset managers must adhere to , that gives asset owners confidence that their assets are safe . The crypto world has been specifically designed to obviate the need for intermediaries ,” says Carl James , global head of fixed income trading at Pictet Asset Management .
“ Institutional asset managers broadly see [ cryptocurrencies ] too much as Wild West . It is very difficult to put a fundamentally driven price on crypto . Fund managers are asking themselves , is this an asset class I want to be managing for my clients , and if I do how ? For a classic long-only asset management client , how do you construct fundamental analysis around any cryptocurrency ?
“ There are several large banks who are offering crypto services and their offering appears to be gaining traction from some asset managers – but these are early tentative steps .”
The client base of a firm has a significant impact on its engagement with digital assets . Those putting their money into hedge funds have a different appetite for risk compared to investors entrusting their money to traditional asset managers . Hedge funds are not subject to such stringent regulation , meaning they have more flexibility on how they choose to invest their money and a greater appetite for risk .
“ Broadly speaking , when looking at the risk parameters that institutional asset managers adhere to for their institutional clients , they have strict agreed metrics which are generally lower than hedge funds and private family offices , whose clients have a higher risk tolerance ,” adds James .
Up or down ? When looking to invest in cryptocurrencies , it goes without saying that tolerance to risk is important . The reason is simple : cryptocurrencies are notoriously volatile .
On Monday 24 May , Bitcoin ’ s value had fallen by half in 40 days , sparking a statement from investment bank HSBC that it would not promote the asset class to clients due to the volatility and lack of transparency .
“ Volatility is something that we hear a lot from potential investors
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