December 5, 2021

Crypto Concerns Could Affect $7 Trillion in Equities

According to a recent report published by Bloomberg, the news agency calls investors’ focus to a significant portion of the stock market which may be vulnerable to cryptocurrency dangers while its investors are completely unaware of it.

Per the findings of the study, more than 50 organizations with a combined market valuation of $7.1 trillion are involved in digital money in some capacity. Although there are organizations that are exclusively involved in the industry or that operate with crypto assets, there are also corporations that have Bitcoin on their income statements, such as Tesla and MicroStrategy. Additionally, firms such as JPMorgan Chase & Co. are solely interested in purchasing and becoming exposed to cryptocurrency holdings, as opposed to firms that only retain cryptocurrencies.

Wide Adoption Of Crypto By Institutional Investors

This year, large shareholders are becoming more interested in digital assets, which is a positive development. More businesses are looking forward to diversifying their revenue streams by utilizing virtual currencies. Additionally, digital currencies could be used to raise the total volatility of a user’s investment portfolio.

According to the company’s advocates, the most significant disadvantage will be the reality that, while holding any portion of digital monies, a firm will be subject to financial risks associated with the unpredictable and chaotic nature of the cryptocurrency industry. In May, for instance, Bitcoin had a retracement of more than 40% in a single week, resulting in huge losses for the overwhelming bulk of the market participants.

Because of the lack of rules for both the Bitcoin and the Altcoins markets, investors are subjected to an extra level of risk. Businesses that maintain digital money on their balance sheets run the risk of falling under the regulatory radar if the Securities and Exchange Commission (SEC) decides to change its policy toward cryptocurrency for whatever reason.

It was the absence of crypto understanding among members of the board of corporations that already owned digital assets that were the primary source of concern for MSCI. Just 79 out of 6,500 members of the board are versatile on cryptocurrency happenings. The majority of the board’s members were experts in cyber security and risk mitigation, rather than in digital assets.

Australia’s $69 Billion Pension Scheme Considers Crypto

Australian pension fund Queensland Investment Corporation is looking into cryptocurrencies, according to a Financial Times report on October 15. Stuart Simmons, President, and Director of Finance, stated that QIC will not commit much due to the lack of legislative clarity in Australia. A $69 billion pension fund entering crypto would be a game-changer for the market, as big investors are notoriously cautious when it comes to portfolio management.

“I don’t believe super funds and the corporate market will automatically participate in cryptocurrency, but as the area develops, I believe pension schemes will pursue exposure.”-Simmon stated. CRYP, an ETF that tracks the price of crypto-related businesses, is slated to debut on the Australian Stock Exchange (ASX) in October. According to a recent survey, 13% of Australians possess Bitcoin.