Asset managers began to doubt Bitcoin would become a reliable asset class. They fear that regulators will tighten their stance on cryptocurrencies.
Today bitcoin fell to $ 42,196, later recovering to $ 45,800, but then continued to decline. This has caused a “wave of doubts” about Bitcoin among investment firms that have managed to get used to the constant growth. T Rowe Price President and Chief Investment Officer Rob Sharps acknowledged that cryptocurrencies have a significant impact on capital markets. However, Sharps discourages his clients from investing in bitcoin due to its “extreme volatility”, as bitcoin is now trading about $ 20,000 below the record level reached just a month ago.
Jason Pride, investment director of Glenmede, even stated that “you need to stay away from bitcoin.” US regulators are not among the supporters of the cryptocurrency industry: last week, the US Securities and Exchange Commission (SEC) already warned investors about the risks of buying Bitcoin futures. Pride believes that after a major correction in Bitcoin, regulators may further tighten their attitude towards it.
“Cryptocurrencies do not live up to expectations that they will become less volatile over time, or that they will be able to protect investors from a fall in the stock market or inflation. The volatility of cryptocurrencies is prohibitively high. We have seen more than once that when common stocks fall, the same thing happens with Bitcoin. Therefore, it cannot be called a good diversifier of the investment portfolio, ”Pride said.
Swiss banking giant UBS also believes regulators will tighten their control over cryptocurrencies. Last week, UBS announced plans to provide its large clients with access to cryptocurrencies. However, the bank warned that by investing in cryptocurrencies, companies are at great risk.
Nicholas Johnson, a commodity investor at Pimco, denied the arguments of bitcoin supporters and opponents of gold. Many people called Bitcoin a salvation from inflation when gold fell in value and cryptocurrencies rallied. According to Johnson, cryptocurrencies cannot be an inflationary asset, since such assets have shown weak dynamics in recent years, while digital currencies have performed well. People are looking for reasons to justify the rise of cryptocurrencies, Johnson added. However, Tom Jessop, head of digital assets at Fidelity Investments, called cryptocurrencies early-stage assets.
“We consider bitcoin to be a good vehicle for the preservation of value. Given its high volatility, it can be said that Bitcoin is in puberty. Many investors are ready to put up with this, believing that Bitcoin is suitable for long-term investments, “- said Jessop.
Fidelity is one of the financial companies that are loyal to crypto assets. Earlier, Jessop suggested that the adoption of bitcoin by mainstream firms would take place “at an accelerated pace” in the near future.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
