Head of global commodities and derivatives research, Francisco Blanch says that cryptocurrencies remain prone to fraud, theft, new protocol adoption and lack of acceptance.
Reasons Behind Call
BofA's global commodities and derivatives research head is suggestion that Bitcoin's volatility remains higher than emerging market currencies and that cryptocurrencies do not correlate with gold, oil, G10 currencies or equities.
Blanch also said that cryptocurrency returns rely on price appreciation that mainly depends solely on the faith of corporations and individuals. Blanch feels that Bitcoin trading at today's prices of $2,800+ is more than double the price at the beginning of the year, should cause for concern.
Most regulated financial companies permit clients to borrow against physical and financial assets, but they do not take cryptocurrency as collateral at the present time, Blanch observed. This view matches that of Morgan Stanley analysts who stated in June that government acceptance is needed for cryptocurrency appreciation, coming at the cost of regulation.
Morgan Stanley Agrees
As stated in a recent video I posted about banks and bitcoin, Morgan Stanley believes that the only way price appreciation will continue will have to be from government's accepting it but this will be at the cost of higher regulation.
In their white paper from June, Morgan Stanley stated that both investors and regulators view cryptocurrencies as assets more than actual currencies. The analysts, stated that bitcoin and other cryptocurrencies, such as Ripple and Ethereum, are more like “investment vehicles” than fiat money that people would spend on products and services. Morgan Stanley also states that bitcoin represents a “marginally more inconvenient way to pay [for goods and services],” and there are only a handful of reasons to use the cryptocurrency instead of a credit or debit card.
My Two Satoshis
Yet again, I see the banking industry, in general, missing the point of cryptocurrencies altogether. The reason that 70% of the people that hold cryptos is not because they feel it is a more "convenient" way of paying for things, but instead it's that people are waking up to the fact that the banking system is inequitable and cryptos offer a convenient way of circumventing this system for the most part.
The people that get it, aren't necessarily modeling the price of this "technology" using the financial-world's' matrices but pricing the potential for usage on a grand-scale-- a scale that would allow the poorest of the poor to have a chance at economic equality.
Question / Thoughts
- Do you feel the cryptospace as a whole is in bubble territory?
- Are Morgan Stanley and BofA's assessment of Bitcoin right?
- Does the banking industry need to rethink the way they look at cryptocurrency?
