Cryptocurrencies will recover and gain popularity-Investor
2023.03.08 10:25
Cryptocurrencies will recover and gain popularity-Investor
By Ray Johnson
Budrigannews.com – A major European asset manager asserts that digital assets like Bitcoin (BTC) are not doomed to fail despite the ongoing cryptocurrency winter and the industry’s massive collapses.
According to investment executives at Paris-based investment manager Amundi, Bitcoin’s limited supply may still attract more attention if inflation remains above the central banks’ targets, despite BTC failing to protect investors against rising inflation in 2021 and 2022.
On March 2, macroeconomist Perrier Tristan and Amundi’s chief investment officer Mortier Vincent published a thematic paper examining the crypto market’s state and perspectives. The executive argued that “dramatic rises in policy and market interest rates” that put pressure on “all asset classes” prevented Bitcoin from acting as an inflation hedge over the past two years.
The authors of the paper say that in the event that inflation is high but not rising, nominal interest rates are likely to stop rising or even fall. Amundi investment executives asserted that such a circumstance might result in a Bitcoin bull market, stating:
“This is a much more favorable environment for an asset whose supply is limited and has a long duration in essence, as its primary attraction is its potential for the future rather than its current status.”
The analysts also gave five reasons why the recent setbacks in the cryptocurrency industry, like the collapses of companies like FTX and Celsius, might not mean that cryptocurrencies will never be used.
According to Amundi executives, the current crisis is likely to “separate the wheat from the chaff” and bring industry expectations that are more realistic. They compared crypto to blue-chip technology stocks, which also went through wild price declines before starting to rise again. Additionally, the analysts pointed out that the current market downturn remains consistent with Bitcoin’s previous price cycles.
Vincent and Tristan referenced Ethereum’s effective shift to a proof-of-stake blockchain, featuring the business’ capacities in decreasing energy utilization. The executives also mentioned that the crisis has not affected crypto’s key value propositions, such as decentralization and immutability of transactions.
Another reason is that prominent businesses in the financial and other sectors have not completely abandoned their interest in cryptocurrencies; Blackrock, for example, bought a stake in Circle in 2022.
The analysts argued that, despite certain price setbacks, regulation will likely have a more positive impact on the industry. After a number of attempts, they emphasized that many regulators have ultimately preferred not to impose a blanket ban on cryptocurrency, and that advanced economies now consider it a possibility.
Amundi’s investment managers acknowledged that the actual economic value of cryptocurrencies “still needs to be fully confirmed,” despite being somewhat optimistic about the future. The experts pointed out that for this to happen, there would need to be a lot of non-speculative demand and widespread use of public blockchains in the real economy.
