According to a survey of investment managers by the French international financial group Natixis, the cryptocurrency space is now prepared for correction after a great rally and impressive profits in 2021.
Being one of the most attractive assets to own, with a total market capitalization exceeding $3 trillion for the first time this year, digital assets are ready for a major correction in 2022
The survey showed that out of 500 institutional investors surveyed, 72% said that cryptocurrencies are not suitable for most retail investors.
At the same time, 28% said they invest in cryptocurrency, and a third of them plan to increase the share of investment next year.
Another 41% said they recognize cryptocurrency as a legitimate investment, while noting the need for regulation by the central bank. More than 60% noted that meme stocks will turn into even bigger bubbles next year, and 64% said that easy access to trading poses a risk to the financial security of retail investors.
The surveyed institutions managed assets totaling $13.2 trillion from 120 different countries. The list includes four central banks, more than 20 sovereign funds, and more than 150 corporate pension plans. The data was collected by CoreData Research in October and November.
Warnings about large sales in the crypto space are not new, as Bitcoin is known for its high volatility – from just under $5,000 in March 2020 to $69,000 in November 2021.
This weekend alone, Bitcoin dropped 20% in one hour and briefly traded around $47,000.
Ethereum also fell to below $ 4,000.
This cryptocurrency volatility emerged after a turbulent week on the US stock market.
It is worth noting that Bitcoin has grown by a little more than 68%, and Ethereum has grown by more than 477% since this year started.
More and more organizations are being drawn into the crypto space to hedge inflation.
Other data from the Natixis study showed that monetary policy mistakes and supply chain problems pose more serious risks in 2022 than a pandemic.
Inflation was the highest portfolio risk. However, 60% of respondents believe that the price pressure will be temporary. According to Natixis, the other two portfolio risks were rising interest rates and stock valuations.