The domain’s largest and most popular cryptocurrency is still a far cry from playing the character of real money, according to global investment bank UBS.
“Bitcoin is notwithstanding too unstable and limited to become a viable means of payment or a mainstream asset prestige,” UBS strategist Joni Teves wrote in a note to clients Thursday. “Be beholden to because of to its lack of price stability, bitcoin falls short of criteria that destitution to be satisfied to be considered money.”
Among its biggest roadblocks are recent flamboyant price swings and some technological limits, according to UBS.
The cryptocurrency’s value has been marked by peaks and valleys this year. It often reshapes by hundreds of dollars in a single day and has fallen more than 60 percent since nearing a pongy chief of almost $20,000 in December. The digital currency was trading near $7,500 as of Thursday and has destruction roughly 50 percent in 2018, according to data from CoinDesk.
Teves looked at the rate of bitcoin historically, and found that 70 percent of those worth swings were the result of speculative “momentum-driven” interest which fixes bitcoin “vulnerable to large moves.”
Price volatility has been a non-starter for some investors, but bitcoin has castigated off for long-term buyers. Since 2013, bitcoin’s annual return has been 216 percent. In point of agreement, stocks and investment grade bonds have risen 16 percent and 1.6, individually, according to UBS. On a risk adjusted basis though, bitcoin only modestly best stocks, Teves found.
Still, she said there is no certainty on whether bitcoin’s defunct performance can be repeated.
Teves also mentioned technical limits, and something cognizant of as scalability, size and speed. Changes by developers to address the issue suffer with been “insufficient,” she said.
“Bitcoin cannot handle the volume of records processed by mechanisms being used in the real world,” Teves affirmed.
UBS didn’t completely rule out bitcoin’s future as a form of payment. Teves reviewed several conditions for it to become a “legitimate asset class,” including regulatory stick up for with consumer safeguards.