Analysts at Swiss investment Bank UBS believe that bitcoin cannot be a “safe haven” for investors due to its high volatility.
UBS experts explained that a protective asset is a financial instrument that can maintain or increase its value during an economic crisis. Such assets do not depend on the economy, and investors can profit from them even if the value of traditional assets decreases or the market collapses.
Bitcoin may be attractive to speculative investors, but given its high volatility, it cannot be classified as a protective asset. Bitcoin does not give investors any guarantees, as its rate may collapse at any time. For example, on August 2, the BTC rate fell from $11,930 to $10,550 in just 6 minutes, which led to the liquidation of positions of more than 70,000 traders worth about $1.1 billion.
In addition, during the current month, the rate of the first cryptocurrency fell below $10,000 several times, but this did not affect the number of transactions in the Bitcoin blockchain. According to the report of the Kraken trading platform on the volatility of the cryptocurrency market, on average in September, the rate of the first cryptocurrency decreased by 7%, so this month can hardly be called favorable for bitcoin.
Analysts named four reasons why bitcoin cannot be considered a protective asset. First, it does not pass the standard risk test due to large fluctuations in the exchange rate, which can lead to a loss of capital. Second, the “survival trend” plays an important role. Often, investors focus on successful cryptocurrencies and do not take into account other, less successful digital assets. As a result, investors ‘ perception of cryptocurrencies may be distorted.
To distinguish between “winners and losers”, you need to have a good understanding of the supply and demand factors of any digital asset. Third, investors in bitcoin do not receive dividends and coupon payments. Fourth, analysts believe that bitcoin does not contribute to the diversification of the investment portfolio. Recently, analysts have observed an increased correlation of BTC with other asset classes, which has led to lower returns.
Earlier, UBS investment Director mark Haefele (Mark Haefele) said that bitcoin carries non-assessable risks that other currencies do not have. At the same time, UBS Group AG CEO Sergio Ermotti has a positive attitude towards blockchain and called it a necessary component for business.