Société Générale – Bitcoin is Extremely Volatile while Gold is Stable
Analysts at Société Générale have made scathing criticism of Bitcoin (BTC) in a note to its clients. The document prepared by the bank’s analysts, cited by CNBC, reads that the numero uno crypto’s “erratic price movements” degraded its position in portfolio of investors.
The increasing menace of government clampdowns around the world, as per the investor report, puts considerable downward pressure on potential Bitcoin price activity. Evidently, the latest BTC price drop has aligned with a slew of adverse legislative action by governments around the world.
The US Treasury is considering requiring cryptocurrency transactions worth more than $10,000 to be informed to the Internal Revenue Service. The Société Générale analysts also discussed the similarities between Bitcoin and gold, acknowledging that both commodities are used as hedging instruments against monetary devaluation by investors.
Over and above marginal safety, nevertheless, the analysts described positive price volatility and fear-of-missing-out purchasing as both store of value assets’ only appeals to popularity, noting:
“The only potential reward to investors in Bitcoin and gold is from their positive price movement, which is essentially the only thing they have in common, apart from their ability to trigger rush buying.”
Given current price volatility, Bitcoin is up 312% year-to-date and 38% year-to-date. Although a portion of bankers see uncertainty as a flaw, others, such as Mark Yusko, CEO of Morgan Creek Capital Management, consider it as a function of Bitcoin’s long-term potential for value addition. Yusko claimed on CNBC Thursday that uncertainty was a required aspect of Bitcoin’s 223% per year positive compounding potential over the past ten years.
“Bitcoin has the same amount of volatility as Amazon stock […] When was the right time to sell Amazon? That would be never. Volatility is not your enemy.”
“#Bitcoin has the same amount of volatility as Amazon stock…when was the right time to sell Amazon? That would be never. Volatility is not your enemy.” @MarkYusko on $BTC and crypto volatility: pic.twitter.com/QLWcoR7DzA
— Worldwide Exchange (@CNBCWEX) May 20, 2021
In the meantime, DBS, a crypto-friendly institution in Singapore, has published a study that describes Bitcoin as “an incentive that fiat money cannot buy.”