While Wall Street investment banking and many of the big managers have surrendered to the bitcoin and cryptocurrencies, the rest of the world remains suspicious of this market that is still considered risky. JP Morgan or Morgan Stanley have launched investment vehicles, Fidelity has requested this week authorization from the US Securities Exchange Commission (Sec) to launch an exchange-traded fund in the creation of Satoshi Nakamoto and Goldman Sachs is investigating the best way to enter 'crypto', but other big players, such as Britain's Schroeders, are still behind the barrier.
The investment giant that controls around half a trillion pounds in assets under management discusses this burgeoning asset in a client note, not without clear reluctance. To begin with, despite the fact that it recognizes that this market is worth monitoring, it charges against its lack of maturity, since it is in "his teenage years". In this context, it questions both that the most widely operated of the crypto currencies can be compared to gold and that it is a means of payment.
Given the limited supply and the idea that bitcoin could act as a store of wealth in the future"A logical comparison could be made with gold," say Xi Chen, multi-asset fund manager, and Ben Popatlal, multi-asset strategist at Schroders, authors of the report. However, they are not convinced by "the nickname of 'digital gold'", they say. "We see it rather as a 'digital collector's item' akin to the darker parts of the world of alternative investments, at least for now," they say.
For Schroeders analysts, bitcoin is very far from earning its reputation as a safe asset as gold has been for thousands of years. "It might structurally look like a hedge against inflation due to its deflationary supply, but it has not stood the test of time like gold has," they argue. Furthermore, Xi and Popatlal believe that "due to our reservations about bitcoin's ability to act as an instrument of exchange, we also do not believe that it should be treated as a currency by investors." Thus, "lclassification as raw material is more appropriate, and we establish comparisons with agriculture and other raw materials that have unpredictable risk and profitability factors ", they assert.
However, these analysts believe that the most honest and pragmatic investment description of bitcoin so far is that "it is a profitability-generating tool with unpredictable behavior patterns and unpredictable relationships with other asset classes." "Having only a digital existence, it is likely that the usefulness of bitcoin is limited to that of a financial asset".
"Our research shows that as bitcoin matures and its risk profile becomes more stable, it could compete with existing stores of value," they continue. However, at this time we believe that it is further from being able to compete with traditional payment / transaction systems, they emphasize, shortly after the same Federal Reserve (Fed) president, Jerome Powell, has indicated that bitcoin does not look like the dollar. In general, "bitcoin seems to have a useful value, although only as a financial asset, so we believe that it may have a non-zero intrinsic value as an investment asset," the experts round up.
"Bitcoin has a high return / risk ratio", they point out, in the same report, "which means that it can be compared with other assets, but it has a high volatility that not all investors will be able to withstand ".
"So far he also has a low correlation with other asset classes, which makes it a seemingly attractive "diversifier". But we believe that the diversifying properties of bitcoin are exaggerated, "they warn.
Furthermore, "when an asset is used tactically, rather than being held in the portfolio over the long term, its statistical properties are somewhat less significant in a practical context. Therefore, as a hedge against existing risks in the portfolio, bitcoin remains unreliable for now", clinch these experts.
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