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Bitcoin will become more stable and liquid when regulatory certainty is in place, Bridgewaterâs director of investment research argued.
A senior analyst at asset management firm Bridgewater believes that regulation could potentially make Bitcoin (BTC) a good asset for institutional investors.
Bridgewater director of investment research Rebecca Patterson claimed that regulatory certainty around Bitcoin would solve some of the cryptocurrencyâs biggest problems 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 Bridgewaterâs potential move into Bitcoin.
âRight now Bitcoin can move 10% on a tweet, thatâs not exactly a store of wealth for most institutional investors. So the volatility of Bitcoin is about 10 times that of your dollar, itâs still double that of the Venezuelan bolivar,â the executive said.
Patterson went on to say that both the volatility problem and liquidity issues would subside if Bitcoin becomes a better-regulated asset:
âThe 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, thatâs going to bring liquidity, thatâs going to reduce the volatility.â
âSo I guess if there was one thing I were watching first, it would be seeing more regulatory certainty,â Patterson said, adding, âI'm not sure when thatâs going to come in the U.S.âÂ
Patterson also said that she doesnât look at Bitcoin as an âalternative currencyâ but rather as digital gold. âIf anything, itâs an alternative to gold or digital gold. I think that would be the better comparison,â she said. Patterson said that many investors have been looking to Bitcoin over concerns about inflation triggered by central bank money printing. However, for Bridgewater, Bitcoin still needs to prove its status as digital gold:
âAs institutional investors, we don't know yet if itâs going to be digital gold, it may be over time, but I donât think we can say that with confidence yet. And that affects whether or not our client should own it.â
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