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Crypto is ‘in the early stages’ of a ‘long-term upward trend’: Analyst

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According to one analyst, most money managers remain cautious about cryptocurrency investing, despite some big-name investors putting their money behind digital coins. At Yahoo Finance’s All Markets Summit Plus, Fairlead Strategies founder Katie Stockton said crypto adoption remains in the “very early stages” with little institutional money flowing into the space. “We’re kind of at the shallow end of that curve. That could accelerate to the upside,” she said. “That goes not just for individuals but institutions as well, especially pension funds is one source of major assets. Really which have not largely been deployed to cryptocurrencies now.”

According to Block data, more than half of the world’s largest banks now have crypto exposure through direct or indirect investments in digital currencies and blockchain projects. But more conservative wealth managers, including state and local pension funds, have largely remained on the sidelines, concerned about the industry’s price volatility and regulatory uncertainty. Earlier this month, two Virginia public pension funds announced they were seeking approval for a $50 million investment in a fund that buys digital tokens and cryptocurrency derivatives. They became one of a few pension funds to announce they jump in publicly.

“I think when we get there, we will see that greater liquidity and sort of tighter spreads, if you will, influence them positively such that there will be less volatility,” said Stockton. “But we found that using the charts and technical indicators at our disposal, the cryptocurrencies are minding support resistance levels. So while there is expected volatility, we have ways to manage risk to navigate those short-term swings by identifying key levels and combining them with indicators that measure momentum and overbought oversold readings.”

Adoption among retail traders has accelerated faster, especially during the COVID-19 pandemic. The price of bitcoin alone has increased nearly 500% since March 2020. The ease with which investors can now buy digital coins through platforms like Coinbase (COIN), Paypal (PYPL), and Robinhood (HOOD) has also led to increased exposure. A recent study by the University of Chicago found that 13% of Americans traded crypto over the last 12 months, compared to 24% who invested in stocks.

Regardless of adoption rates, Stockton sees a “long-term uptrend in crypto.” Despite a recent sell-off triggered by China’s central bank banning all crypto transactions and fears around the Chinese property market, Stockton said crypto assets have held on to key resistance levels, signaling support in the market. “Bitcoin has tended to outperform when they’re collectively going lower, and [crypto assets] do tend to remain directionally in step,” she said. “So even though you can always find sources of outperformance and underperformance, you’ll find that most [coins] are all up on the same day and all down on the same day, and I think that that is something that we can depend upon.”

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