Bitcoin Will Gain From The Growing Distrust In Traditional Asset Classes: Morgan Stanley Analyst

By Brenda Ngari – December 10, 2020

The United States dollar has been the world’s premier reserve currency for a century now, but bitcoin has the potential to dethrone the greenback in the long-run and end its long-lived dominance. This is according to an analyst at the U.S. investment bank Morgan Stanley.

Ruchir Sharma, the head of emerging markets and chief global strategist at Morgan Stanley is of the opinion that the increasing distrust in legacy finance will put an end to the dollar’s supremacy as the reserve currency and bitcoin could stand to benefit from this lack of faith.

Will The Heightened Distrust In Traditional Finance Usher In A New Wave Of Bitcoin Interest?

Sharma posited that over the course of the dollar’s reign as a reserve currency, other notable national currencies like the Chinese yuan and the euro have terribly failed to garner the trust of people across the globe, according to a report by The Financial Times on Wednesday. This underlines the lack of a successor for the greenback.

The analyst believes decentralized alternatives like bitcoin are likely to oust the dollar. Bitcoin has emerged as the best-performing asset this year, leaving other asset classes like stocks, fixed return bonds, other currencies, and precious metals in the dust. In particular, bitcoin has posted a spectacular run since March despite the COVID-19 pandemic and central banks around the world going on a money-printing rampage.

Sharma explained:

“The dollar’s reign is likely to end when the rest of the world starts losing confidence that the US can keep paying its bills. […] Money printing is likely to continue, even when the pandemic passes. Trusted or not, Bitcoin will gain from widening distrust in the traditional alternatives.”

Despite its wild volatility, bitcoin is still regarded as one of the best hedges against currency devaluation and economic uncertainty. And with trust in traditional systems dwindling, it will come as no surprise if more people turn to the flagship cryptocurrency.

Bitcoin Is On Course To Replace The Dollar As A Medium Of Exchange

The Morgan Stanley strategist went on to note that bitcoin’s adoption is growing significantly as the asset’s use cases expand. For instance, he posits that payment giant PayPal and its subsidiary Venmo recently started storing bitcoin and they are now planning to start accepting the cryptocurrency as payment beginning from next year.

Moreover, he states that the bellwether cryptocurrency is making progress on its goal to overtake the dollar and become the go-to medium of exchange. Sharma then warned central banks around the world to be more cautious of their fiscal and monetary policies if they wish to remain kings of the hill.

He stated:

“Bitcoin’s surge may still prove to be a bubble, but even if it pops, this year’s rush to cryptocurrencies should serve as a warning to government money printers everywhere, particularly in the U.S. Do not assume that your traditional currencies are the only stores of value, or mediums of exchange, that people will ever trust.”

Notably, several public corporations have poured money into bitcoin in recent months, strengthening the crypto’s appeal as an inflation hedge and reserve asset.

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The views expressed in the article are wholly those of the author and do not represent those of, nor should they be attributed to, ZyCrypto. This article is not meant to give financial advice. Please carry out your own research before investing in any of the various cryptocurrencies available.

The original article written by Brenda Ngari and posted on ZyCrypto.com.

Article reposted on Markethive by Jeffrey Sloe

Fidelity unlocks Bitcoin as collateral for borrowing on BlockFi

Depositors using Fidelity Digital Assets custody will be able to access liquidity via BlockFi.

Image courtesy of CoinTelegraph

            DEC 09, 2020

Fidelity Digital Assets, the crypto arm of the asset management conglomerate, will allow institutional customers to pledge their Bitcoin (BTC) as collateral for cash loans.

As reported Wednesday by Bloomberg, the firm partnered with crypto lender BlockFi to disburse the loans. Institutional clients of Fidelity’s custodial solution will be able to draw cash loans from their stored Bitcoin without having to move it, provided they have an account with BlockFi.

The target customers of this feature are primarily hedge funds, miners and over-the-counter trading desks. Overcollateralized lending is generally used to access liquidity without losing a long position on the asset used as collateral. The cash can be used to enter leveraged positions and build hedged strategies or to pay for business expenses.

In a conversation with Cointelegraph, a Fidelity spokesperson said that the offering comes as part of a "demand for increased capital efficiency" among its customers. "Our full-service offering that includes custody and trading will continue to help institutions enable capital efficiency, while prioritizing asset safety and stillness," they said

The loan-to-value ratio will be set to 60%, meaning that each $1,000 in collateral can back at most $600 in borrowed money. Nonetheless, that parameter could change according to the specific customer's needs. Fidelity clarified that it does not play any role in setting loan terms, limiting its contribution in the tri-party agreement to the safekeeping of the Bitcoin.

Fidelity Digital Assets has provided Bitcoin custodial services since October 2019. More recently, it also began offering its services to the Asian market.

BlockFi is a major cryptocurrency lender, offering interest on deposits sent to the platform. While it is a retail-centric company when it comes to collecting deposits, that money is primarily lent out to other institutions. The company recently launched a Visa debit card with Bitcoin rewards.

Update, 16:30 UTC: Added commentary from a Fidelity spokesperson.

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Original article posted on the CoinTelegraph.com site, by Andrey Shevchenko.

Article re-posted on Markethive by Jeffrey Sloe

US gov is Bitcoin’s last remaining adversary, says Messari founder

Bitcoin may have experienced the perfect storm for success, but action by the United States government may remain a threat.

Image courtesy of CoinTelegraph

            DEC 08, 2020

Ryan Selkis, co-founder of data and research company Messari, recently released his 2021 crypto sector thesis, examining the state of the industry as well as forecasting what lies ahead. Selkis explains in this report that the U.S. government is one remaining adversary he feels BTC must win over.

“The ‘final boss’ to beat is the state,” Selkis wrote in his report, released on Tuesday. “For the U.S., bitcoin presents a tool to undermine international sanctions, and 80% of mining capacity now sits behind enemy lines in China, Russia, and Iran,” he noted. “Will a Biden administration like BTC? TBD.”

Bitcoin has trudged through its fair share of governmental adversity in the 12 years since its inception. With its status as a commodity, Bitcoin’s reputation is somewhat solidified. Concerns of a U.S. government ban have still arisen, but the Office of the Comptroller of the Currency’s acting leader, Brian Brooks, recently explained that his unit views Bitcoin favorably.

Still, the government changed its tune on gold in 1933, confiscating the precious metal from citizens en masse. Even though the U.S. government may find it difficult to confiscate Bitcoin functionally, banning the asset could still hurt its price and associated cash on-ramps.

On the bullish side of the table, Selkis gave a nod to Bitcoin’s resilience. “Bitcoin is an unseizable form of private money that’s proven very hard to kill,” he wrote. “It’s outperformed every major asset class over every relevant time period in its history, and it’s got perfect macro tailwinds and momentum,” he said, adding:

“It’s getting ‘safe’ to purchase from a legal and reputational standpoint as a professional money manager, and its supply will inflate less than the Fed’s target rate no matter what happens next year. When you look at BTC vs. gold, and its growth vs. global M1, M2, and central-bank balance sheets, it’s a compelling investment.”

Bitcoin’s price has flourished in 2020 amid massive U.S. money printing efforts and economic uncertainties. A number of large mainstream players, such as Microstrategy and Paul Tudor Jones, have allocated large sums of money to Bitcoin this year as well, padding the asset’s credibility.

Bitcoin topped near $20,000 in December 2017, only to fall below $5,000 multiple times in the years following. This year, Bitcoin broke its previous all-time high, showing a refusal to die, something big mainstream players like, according to Selkis’ interview with Anthony Pompliano, published on Tuesday.

“Smart money investors knew about Bitcoin back in 2017,” Selkis said, subsequently explaining Bitcoin’s mainstream attention back then, as well as its boom, bust, and boom again over the past three years. “I think a lot of them have appreciation for things that don’t die,” he explained.

Mainstream giants, such as Amazon and eBay, have also shown great resilience through the years, rising from the ashes after the dot-com bubble popped in the early 2000s.

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Original article posted on the CoinTelegraph.com site, by Benjamin Pirus.

Article re-posted on Markethive by Jeffrey Sloe

Fear Among Big Investors May Support Bitcoin's Polarizing Rally

(Jakub Jirsak/Dreamstime

Sunday, 06 December 2020 08:36 PM

The financial industry was something of a curious onlooker during Bitcoin’s furious, retail-led rally past $19,000 in 2017. There are signs the sector is playing more of role in the cryptocurrency’s latest surge.

Licensed crypto exchanges, Bitcoin funds and a regulated futures market give the likes of trend-following quant funds, asset managers and family offices avenues for investment that didn’t exist a few years ago. Mix in this year’s 170% jump in Bitcoin’s price amid a once-in-a-generation pandemic, and it becomes clearer why more institutions might size up the volatile asset.

“The multitude of regulated crypto exchanges and custodians has eliminated the ‘career risk’ for institutional investors,” PwC’s Hong Kong-based Global Crypto Leader Henri Arslanian said in an interview. “In 2017, there was retail FOMO. The question is whether we will see institutional FOMO in 2021.”

Bitcoin began December by hitting a record just shy of $20,000. Proponents argue it’s muscling in on gold as a portfolio diversifier, as stimulus injections to counter the economic damage from the pandemic weaken the dollar. Critics see pure gambling by retail investors and speculative pros in a scandal-prone sector, and anticipate a bust like the one after the peak three years ago.

JPMorgan Chase & Co. strategists point to the Grayscale Bitcoin Trust — which invests in the digital coin and tracks its price — as a potential window into wider crypto ardor beyond the retail demand from Millennials.

The trust’s “exponential” growth suggests longer-term investors like asset managers and family offices may have been playing a bigger role in recent weeks, compared with trend-following commodity trading advisors, a team led by Nikolaos Panigirtzoglou wrote in a Nov. 27 note.

The Grayscale vehicle’s assets have swollen to more than $10 billion from $2 billion at the start of December last year, its website and factsheets show. It drew almost $720 million of inflows in the third quarter, according to an investment report, which said institutions — dominated by hedge funds — accounted for 81% of the money coming into the firm’s digital-asset funds.

Guggenheim Partners LLC last month reserved the right for its $5.3 billion Macro Opportunities Fund to invest in the Grayscale trust.

“Institutional investors are keen on portfolio construction in the wake of Covid, and the ways they need to reposition themselves given how governments have injected stimulus into the system,” Michael Sonnenshein, managing director of Grayscale Investments in New York, said in an interview, adding the size of investment allocations is growing.

Over the summer, Fidelity Investments announced the launch of a passively managed Bitcoin fund aimed at qualified purchasers through family offices, registered investment advisers and other institutions. Public companies Square Inc. and MicroStrategy Inc. recently invested in the coin. Investment managers Paul Tudor Jones and Stan Druckenmiller have backed the digital asset as a hedge against potential inflationary pressure, though price increases remain subdued.

Strategists have started to expand or initiate coverage of Bitcoin, sensing more demand for crypto analysis in the financial industry.

One example is U.S. brokerage BTIG LLC, whose chief equity and derivatives strategist Julian Emanuel wrote last month that cryptocurrency will come of age in part due to the policy response to the economic hit from the pandemic.

Digital assets remain a fringe market for the approximately $52 trillion of funds managed by institutional investors. After all, total crypto market capitalization is just $580 billion, according to data tracker CoinMarketCap. Moreover, potential obstacles remain, such as the fact that Bitcoin ownership is concentrated among a few large holders often referred to as whales.

Still, PwC’s Arslanian expects increased pressure on asset managers to consider Bitcoin as investors become more comfortable with it. “The question investors will ask fund managers will gradually switch from ‘why did you invest in crypto?’ to ‘why have you not yet invested in crypto?’” he said.

© Copyright 2020 Bloomberg News. All rights reserved.

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The original article posted on Newsmax.com/Finance.

Article reposted on Markethive by Jeffrey Sloe