Analysts at the private banking division of the British financial giant Barclays believe bitcoin is" almost unfit for investment " asset. This is reported by Financial News.
"Although the potential return is almost impossible to predict, the volatility makes this asset almost unsuitable for investment from the perspective of the portfolio," said Gerald Moser, senior strategist at Barclays Private Bank. – Its volatility spikes are many times higher than what is observed in other risky assets, such as stocks or oil. Because of this, many will probably throw the cryptocurrency out of any portfolio during the usual optimization based on the average deviation."
Over the past six months, a number of large companies have invested in bitcoin in order to preserve reserves or diversify portfolios. However, according to Moser, the cryptocurrency does not cope well with this task, as it does not provide the benefits of diversification when they are needed most, for example, during a sharp decline in financial markets.
According to the analyst's observations, the correlation of weekly returns since 2016 shows that bitcoin does not have strong correlations with any other asset and has performed even worse than securities during the last three stock market corrections since 2015. He argues that during these corrections, investors could benefit from gold or fixed-rate assets, but bitcoin only made their situation worse.
Bitcoin's price swings, observed simultaneously with the formation of similar dynamics in the stock market, according to Moser, make it more like a bubble than a " rational, long-term investment decision."
"The cryptocurrency's performance was primarily driven by retail investors joining what appears to be an unsustainable rally, rather than institutional money invested for the long term," he adds.
Edam Grimsley, Investment Director of the Private Markets team at Aberdeen Standard Investments, expressed a similar opinion: "This story about institutional investors increasing their presence may be true, but I don't think it comes anywhere close to the unconfirmed information that individuals give. Only a small market share will be interested in this. The share of institutional investors currently investing is still very small and limited."
According to Bitcoin Treasuries, public investors, including MicroStrategy and Grayscale, have so far bought 1,216,235 BTC, or 5.79% of the total cryptocurrency issue.