Institutional Investors Pulled Out From Crypto Trading in 2023, Says JPMorgan

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The growing price of Bitcoin (BTC) has not done much to mitigate skepticism in the minds of institutional investors according to a recent survey. American financial service provider JPMorgan surveyed 835 participants that were all institutional traders as part of its e-Trading Edit seventh edition from January 3rd to January 23rd. 

Out of the 835 respondents from 60 locations around the world, 72% have no plans of exposing their financial portfolios to cryptocurrency this year.

JPMorgan’s survey was targeted towards uncovering the technical developments and macroeconomic factors that will play a significant role in crypto trading and influence the performance this year.

However, it met with a lot of hesitations amongst institutional investors who have had their fair share of the market in 2022. As per the result of the survey, about 601 respondents confirmed that in 2023, there are “no plans to trade crypto/digital coins.” 

Barely 14% of the respondents expressed optimism about the crypto market saying they could continue to invest in cryptocurrency or they will start trading this year. Another 14% have no plans to trade this year but may change their minds and do otherwise within the next five years.

Markedly, a huge percentage of those who participated in the survey at the time, up to 92% claimed that their investment portfolio does not have exposure to crypto assets.

On deeper probing, many of the respondents cited high market volatility as an outstanding reason behind their decision. The United States Federal Reserve quantitative tightening measure imposed in 2022 is suspected to be another challenge considered by institutional traders as 22% of respondents cited liquidity concerns as an impediment to trading performance.

Is Institutional Investors’ Decision FTX-Induced?

In November 2022, American cryptocurrency exchange Coinbase posted results from Digital Assets Outlook Survey which rounded up 140 institutional investors as a sample. 

Amongst these respondents, 58% indicated an interest in increasing their crypto holdings exposure within the next three years. Comprehensively, 72% of respondents in this survey perceive a bullish run for crypto in the long term and are therefore sticking to the industry.

Although the survey was conducted between September and October before the implosion of the FTX Derivative Exchange which took place in November indicating that the latest JP Morgan survey result may have been influenced by the unfortunate liquidity crunch.

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