In a notice to shoppers and workers on Friday, titled “Is Bitcoin too huge to disregard?”, the chief funding workplace of UBS International Wealth Administration stated it stays “unconvinced” by bitcoin amid the cryptocurrency’s latest surge to record highs of over $61,000 per coin on March 13.
The UBS workforce argued “bitcoin’s restricted and extremely inelastic provide exacerbates its volatility” making it a danger to shoppers. The corporate additionally highlighted the restricted real-world use instances for the digital asset.
UBS recommended traders search for property which are much less risky and which have “extra clear valuation fashions.”
They emphasised merchants ought to act with “excessive warning with regard to crypto hypothesis” as a result of swings in “investor sentiment” or new “regulatory crackdowns” may pose important dangers.
The chief funding workplace provided different investments for shoppers together with semiconductor shares to benefit from crypto-mining and gold for draw back safety.
The UBS workforce did notice institutional traders’ latest entry into cryptocurrency has prompted a growth however cautioned traders concerning the volatility that it might carry to the asset.
“Empirical proof from established asset lessons means that larger participation by institutional traders may improve volatility because of their extra opportunistic funding method,” the UBS workforce wrote.
In a concluding assertion to the notice, UBS added that of their view “hypothesis in crypto is a raffle, not an funding.”
Regardless of UBS’ bearish view, bitcoin continues to make headlines and massive returns for traders. The cryptocurrency has appreciated roughly 700% over the previous yr alone and cryptocurrencies noticed record inflows of $4.2 billion within the first quarter of 2021.
Elon Musk additionally stated in a tweet earlier this week that Tesla would accept the cryptocurrency as a type of fee.
UBS wasn’t alone this week in placing a bearish tone. Bridgewater Associates Ray Dalio stated he believes the US authorities might find yourself banning cryptocurrencies altogether in an interview with Yahoo Finance.