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Why majority of institutional traders hate crypto exposure

TL;DR

  • JPMorgan’s survey reveals 78% of institutional traders have no plans to trade cryptocurrencies in the next five years.
  • Only 7% of respondents see blockchain as influential in trading’s future, a steep decline from previous years.
  • AI and machine learning are now viewed as the most impactful technologies for future trading by 61% of participants.

It’s not exactly a secret that a significant chunk of the trading elite views cryptocurrency with the kind of enthusiasm one might reserve for a root canal. This isn’t a flippant trend or a knee-jerk reaction to a few bad headlines; it’s a deep-seated skepticism that’s been brewing in the marbled halls of institutional finance for years. According to a recent survey by the banking titan JPMorgan, a whopping 78% of institutional traders have checked the “thanks, but no thanks” box when it comes to trading cryptocurrencies over the next half-decade. This reluctance isn’t just a statistic; it’s a statement.

The Chilly Reception to Blockchain Technology

Once hailed as the next big thing, blockchain technology’s star seems to be dimming—at least in the eyes of those who once thought it would revolutionize trading. The JPMorgan survey, which gathered insights from over 4,000 trading professionals, suggests that blockchain’s appeal is on the wane.

In 2024, a mere 7% of respondents saw blockchain as a key player in the future of trading, a dramatic nosedive from the 25% who were singing its praises just two years prior. Meanwhile, AI and machine learning are now considered the belle of the ball, with 61% of participants betting big on their impact over the next three years. This pivot highlights a broader shift in priorities and perhaps a recalibration of what innovation truly means in the fast-paced world of trading.

The numbers are telling: only 9% of those surveyed are currently dabbling in crypto, a marginal increase from the previous year’s 8%. Yet, there’s a sliver of growth in optimism, with 12% indicating they might dip their toes in the crypto waters within the next five years. This could be seen as a cautious thaw in the crypto winter, spurred by major financial institutions’ forays into the sector and the U.S.’s nod to spot Bitcoin ETFs. But let’s not break out the champagne just yet. The overarching sentiment remains frosty at best.

The Skepticism Rooted in Crypto Volatility and Uncertainty

The survey’s findings underscore a broader narrative of caution and skepticism. It’s not just about the volatility—a term that crypto traders have reluctantly grown accustomed to—but also about the fundamental uncertainties that shroud the sector. The volatile swings of Bitcoin and its brethren are legendary, with the digital currency’s volatility rate soaring to 81% in 2021. This kind of unpredictability is enough to give even the most seasoned traders pause, considering the comparative stability of traditional markets.

Moreover, the survey sheds light on macroeconomic concerns that are top of mind for traders, with inflation, the U.S. election, and the specter of recession dominating their radar. These concerns, coupled with the volatile nature of cryptocurrencies, paint a picture of a trading environment fraught with uncertainties. It’s a landscape where the bold may venture, but only with a healthy dose of caution.

The disinterest in crypto trading among institutional traders is a complex tapestry woven from various threads of concern. From the volatility that makes seasoned traders wary to the evolving perceptions of blockchain technology, the narrative is clear. The path to embracing digital currencies in institutional trading is fraught with skepticism and caution, underscored by a preference for technologies perceived as more stable and transformative.

Disclaimer: The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Jai Hamid

Jai Hamid is a passionate writer with a keen interest in blockchain technology, the global economy, and literature. She dedicates most of her time to exploring the transformative potential of crypto and the dynamics of worldwide economic trends.

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