Switzerland’s Largest Bank UBS Suggests Alternative Investment Opportunities in Cryptocurrency – Markets and Prices Bitcoin News
Switzerland’s largest bank, UBS, has proposed some investment strategies for investors who want exposure to crypto assets with less risk than investing directly in Bitcoin, Ether or other cryptocurrencies. “There are several primary ways for investors to access this potential while avoiding the high volatility and regulatory risks of holding Bitcoin or competing cryptos,” the UBS analysts explained.
Crypto investment advice from UBS
The UBS Global Wealth Management team published a research note on alternative investments to directly holding cryptocurrencies last week.
The bank’s analysts, led by UBS Chief Investment Officer Mark Haefele, stated that “direct exposure to cryptos is highly speculative.” They believe Bitcoin’s recent decline from a record high in November last year has “undermined two of the asset class’s most common defenses.”
The UBS report states: “First, it offers an effective form of diversification from traditional financial assets like stocks… Second, it is becoming increasingly difficult to view crypto as a form of ‘digital gold’ that offers protection against elevated inflation. ”
While UBS analysts maintain that direct exposure to crypto assets is highly speculative, they stressed that “it doesn’t mean the technology underlying digital assets isn’t promising to investors.” They described:
We see a range of potential applications – from financial services to healthcare to luxury goods – that will add a potential $1 trillion to global GDP this decade.
“There are several key avenues for investors to access this potential while avoiding the high volatility and regulatory risks of holding Bitcoin or competing cryptos,” continued the UBS analysts.
The first strategy the analysts suggest is to invest in companies that are building the necessary infrastructure for the crypto ecosystem, as they are likely to benefit from the wider adoption of distributed ledger technology (DLT) applications.
UBS analysts stated: “The growth of DLT applications will require more hardware to validate activities on the network, including application specific integrated circuits (ASICs), application processors and graphics processing units (GPUs). Other trailblazers are software vendors and data center companies that help build the entire infrastructure.”
Second, UBS analysts noted:
An even bigger opportunity, in our view, lies with the platform companies that can leverage DLT-based applications.
“As technology becomes more widely deployed over the next 5 to 10 years, we see opportunities from the introduction of new product services and categories, potential savings from technology deployment, potentially lower prices, and an overall improvement in business efficiencies,” they detail.
“Across diverse industries such as internet, fintech, software, IT services, consumer services and insurance, these companies can leverage digital asset technology to provide a wide range of services such as payments, trade finance, custody, supply chain management, automation and consulting,” concludes the UBS report.
In January, UBS warned of a crypto winter amid expectations of rate hikes and Fed regulation. Widespread cryptocurrency speculation “inevitably invites closer surveillance to protect consumers” and “protect financial stability,” the analysts warned.
What do you think of the alternative crypto investment strategies proposed by UBS? Let us know in the comment section below.
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