If you work for Nordea, allocating a portion of your 2017 bonus to bitcoin or other cryptocurrencies is already out the question – the Scandinavian bank banned its employees from having anything to do with the crypto currency scene last week. At other banks, however, investing your bonus in crypto remains a definite possibility (recent crashes not withstanding). This doesn’t mean that bankers are going to do it.
U.S banks have already announced bonuses and by all accounts they’re not bad. European banks are due to announce in the coming months (and they may be worse.) Either way, bitcoin doesn’t seem a temptation.
“I don’t trust it,” says a strategist at Citi, adding that she’s suspicious of what will happen to crypto in the long term.
Although banks have bemoaning the lack of volatility in equity and bond markets, and welcoming its tentative return in 2018, it seems bitcoin’s gyrations are too much for a population that’s become used to calm. One trader at Deutsche Bank says he bought into bitcoin a few months ago, but won’t be buying any more unless the “volatility goes down,” particularly as the outlook for DB bonuses isn’t great. A banker at DB says the prospect of putting his bonus into crypto hadn’t even occurred to him.
Nor are quants – who might be expected to espouse bitcoin mining – any more enthusiastic. “There’s a ‘crypto winter’ going on,” insists one quant at J.P. Morgan, pointing out that there are, in any case, “several tech stocks which have gained more than 100%, and are be preferable to crypto as they’re driven by real economics.”
This doesn’t mean people employed by global investment banks have avoided cryptocurrencies altogether. One financial institutions group (FIG) banker at a Canadian bank says he’s avoiding bitcoin (“I feel it is largely driven by herd mentality”) and putting money into smaller and less volatile cryptocurrencies. “I understand it’s a high risk investment and so have initially invested modest amount. It’s a long term play and I’m not tracking daily movements,” he says.
Even so, there are pockets of enthusiasm. The Citi strategist says one of her colleagues is long, “a few thousand.” Others are long a lot more. “A few people here put between $1k and $50k into crypto” says the Deutsche trader. “Now they claim to have portfolios of $100k to $2m.”
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