Investment analyst: „Bitcoin needs more legal clarity“

Von | 26. Februar 2021

More legal clarity could significantly improve the liquidity and volatility of the market-leading cryptocurrency.

A senior analyst at Bridgewater wealth management company believes regulation can make Bitcoin ( BTC ) a reliable investment product for institutional investors

Rebecca Patterson, head of investment research at Bridgewater, said legal clarity could solve some of the biggest problems facing the market-leading cryptocurrency, particularly those related to high volatility and low liquidity.

Patterson made the corresponding statements in an interview with Bloomberg on February 24th, citing volatility and liquidity as the decisive hurdles preventing Bridgewater from investing in Bitcoin.

“Right now, Bitcoin can move 10% from just one tweet, and that’s not the kind of store of value institutional investors envision. Bitcoin’s volatility is ten times that of the US dollar, it is twice as high as that of the Venezuelan bolivar, ”the analyst said in this context.

The problems caused by volatility and liquidity could, however, be resolved through clear regulation, as the expert points out:

„The more a regulatory system around Bitcoin and other cryptocurrencies develops, the more investors will dare to enter the market. This then goes hand in hand with increased liquidity, which in turn will reduce volatility. „
“So the first thing that is needed is more legal clarity,” said Patterson. And further: „I don’t know how long it will take in the US, though.“

The financial expert also states that she does not see Bitcoin as an „alternative currency“, but rather as digital gold. “If anything, it is an alternative to gold or digital gold. That’s a better comparison in my opinion, ”as Patterson points out. Most investors would see Bitcoin as a hedge against looming inflation and the loose monetary policy of the central banks. For Bridgewater, however, the crypto market leader would first have to prove even more clearly that it really is digital gold:

“As institutional investors, we are not yet entirely sure whether Bitcoin is digital gold. Perhaps over time it will, but we cannot say for sure at this point. That in turn depends on whether our clients should own them or not. „