When regulatory clarity is in place, Bitcoin will become more robust and liquid, concluded Bridgewater’s director of investment research.
A senior analyst at Bridgewater, an asset management company, claims that regulation could probably make Bitcoin (BTC) a good institutional investor asset.
Rebecca Patterson, director of investment research at Bridgewater, argued that regulatory stability around Bitcoin would solve some of the main cryptocurrency concerns associated with high volatility and low liquidity.
In a Feb. 24 interview with Bloomberg, Patterson said that issues like volatility and liquidity remain the main hurdles for Bridgewater’s potential move into Bitcoin.
Bitcoin will jump 10 percent right now on a tweet, which for most institutional investors is not necessarily a store of money. So the volatility of Bitcoin is about 10 times the volatility of the currency, twice the volatility of the Venezuelan bolivar,’ said the executive.
Patterson went on to claim that if Bitcoin becomes a better-regulated commodity, both the problem of volatility and liquidity problems would subside:
“The more you get a real regulatory ecosystem developing around Bitcoin and other currencies, the more other types of investors are going to be comfortable coming in, that’s going to bring liquidity, that’s going to reduce the volatility.”
“So I guess if there was one thing I were watching first, it would be seeing more regulatory certainty,” Patterson said, adding, “I’m not sure when that’s going to come in the U.S.”
Patterson also said that she sees Bitcoin not as a “alternative currency,” but as digital gold instead. If anything, it is an alternative to digital gold or gold. That would, I guess, be a better contrast,’ she said. Patterson said several investors have been looking to Bitcoin over inflation fears caused by the printing of central bank money. However, Bitcoin also needs to prove its position as digital gold for Bridgewater:
“As institutional investors, we don’t know yet if it’s going to be digital gold, it may be over time, but I don’t think we can say that with confidence yet. And that affects whether or not our client should own it.”
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