- UBS International Wealth Administration stated it’s “unconvinced” bitcoin’s latest rise is completely different from earlier speculative bubbles.
- UBS’s chief funding workplace stated in a word on Friday that hypothesis in bitcoin is a “gamble.”
- The workforce argued bitcoin’s “restricted actual world use” and “extraordinary worth volatility” makes for a poor funding.
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Bitcoin’s “restricted real-world use” and “excessive volatility” illustrate the cryptocurrencies latest surge remains to be a speculative bubble, based on UBS Wealth Administration.
In a word to purchasers and workers on Friday, titled “Is Bitcoin too large to disregard?”, the chief funding workplace of UBS International Wealth Administration stated it stays “unconvinced” by bitcoin amid the cryptocurrency’s latest surge to file highs of over $61,000 per coin on March 13.
The UBS workforce argued “bitcoin’s restricted and extremely inelastic provide exacerbates its volatility” making it a danger to purchasers. The corporate additionally highlighted the restricted real-world use instances for the digital asset.
UBS advised traders search for belongings which are much less risky and which have “extra clear valuation fashions.”
They emphasised merchants ought to act with “excessive warning with regard to crypto hypothesis” as a result of swings in “investor sentiment” or new “regulatory crackdowns” might pose vital dangers.
The chief funding workplace provided various investments for purchasers together with semiconductor shares to reap the benefits of crypto-mining and gold for draw back safety.
The UBS workforce did word institutional traders’ latest entry into cryptocurrency has prompted a increase however cautioned traders in regards to the volatility that it could carry to the asset.
“Empirical proof from established asset courses means that greater participation by institutional traders might improve volatility resulting from their extra opportunistic funding strategy,” the UBS workforce wrote.
In a concluding assertion to the word, UBS added that of their view “hypothesis in crypto is a bet, not an funding.”
Regardless of UBS’ bearish view, bitcoin continues to make headlines and massive returns for traders. The cryptocurrency has appreciated roughly 700% over the previous yr alone and cryptocurrencies noticed file inflows of $4.2 billion within the first quarter of 2021.
Elon Musk additionally stated in a tweet earlier this week that Tesla would settle for the cryptocurrency as a type of cost.
UBS wasn’t alone this week in putting a bearish tone. Bridgewater Associates Ray Dalio stated he believes the US authorities might find yourself banning cryptocurrencies altogether in an interview with Yahoo Finance.