Institutional Investors View Bitcoin and Cryptocurrencies as Bullish if Economic Recession Unfolds
Institutional Investors Are Bullish About Crypto During a Recession
According to a recent survey by Fundstrat Global Advisors, it has been found that there is a lot of bullish sentiment amongst institutional investors concerning crypto during a recession. The results of this survey showed that over 70 percent of institutional investors believe the price of crypto would increase during a recession.
What Would Occur During a Recession?
The first effect of a recession is that growth drops. This drop in growth is seen in two consecutive quarters where there is negative growth or a drop in GDP. Secondly, the prices of stocks start to fall. Thirdly, the bond yields fall as the investors start to purchase Treasuries, which are considered a haven asset. However, now investors expect crypto prices to rise. Another twitter pole by the same company showed that 59% of people agreed with their report.
Crypto is often linked to the antiestablishment libertarians that gained following the financial crisis that brought world economic powers to their knees. Since then, crypto coins have been slowly incorporated into the traditional markets. Various funds seek to capitalize on the volatility of these assets.
Despite a rough patch in 2018, Bitcoin managed to climb over 1000% in 2017. Since its peak in December 2017, it has shed more than 60% of that value. With this gradual mainstream adoption, Mati Greenspan, a senior market analyst at eToro said that a rally during a recession was possible. Given the nature of the 2008 financial crisis where trusted third parties scorned investors, a medium of exchange that runs on a P2P basis, this could inspire investors.
Mr. Greenspan added that Bitcoin was built on ashes of the financial collapse. It was intended as an alternative to fiat run by central banks. If there is a catalyst that makes people question the role of these central organizations, then he could see crypto rising. However, with the US economy growing at its fastest since 2014, this debate might take quite a while to be settled.
What Influences Crypto Prices
The Fundstrat survey found that central banks have the most influence on crypto. Over half of institutional investors polled said that the prices of Bitcoin had bottomed out. Besides that, many institutional investors believe that by the end of 2019, BTC will have exceeded $15,000. The survey showed that retail investors have less confidence that this will occur. The XRP coin, powered by the Ripple protocol was the most polarizing according to more than half of the respondents.
The Twitter poll said that 46% of respondent chose XRP as their favorite. In the same poll, 31% said that it made the least sense. No other coin was that polarizing. Even 28% of institutions agreed XRP made the least sense. There was no institution, which picked it as their most favorite.
Details of the Survey
The online survey had six questions. It occurred between September 30 and October 3. There were ~9,500 respondents. The Institutional survey occurred at a dinner with 25 institutions taking part according to the company.