Cryptocurrencies can replace gold – Bank of Singapore
Cryptocurrencies can replace gold subject to several conditions
Reducing volatility will not play on reaching new records
Institutionals will reduce exposure of cryptocurrency prices to rapid changes
International consortium of news organizations developing transparency standards.
Cryptocurrencies can move gold in the investment asset market, according to the central bank of Singapore
Private cryptocurrencies are unlikely to replace government money, but they can partially crowd out assets such as gold. This opinion was expressed in an interview with The National by Mansour Mohi-uddin, chief economist of the Bank of Singapore.
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According to the central bank, cryptocurrencies could replace gold as an electronic store of value. To do this, however, they need to remove key barriers like trust, volatility and regulation..
By eliminating these shortcomings, investors will be able to add cryptocurrencies to portfolios as a store of value, according to the Bank of Singapore.
Gold is not in vogue
According to Mokhi-uddin, a key obstacle to the entry of investors is the lack of reliable instruments. At the same time, cryptocurrencies must also resolve the issue of constant volatility:
“Firstly, investors need reliable institutions to be able to securely store cryptocurrencies. Second, liquidity needs to be significantly improved to bring volatility to manageable levels, ”he said..
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Nevertheless, a solution is on the way. The presence of institutions with long-term investments can reduce volatility. Thus, the price of cryptocurrency will be more determined by fundamental factors, and not speculation, according to the Bank of Singapore..
A new high is inevitable
However, a decrease in volatility does not mean a weakening of growth dynamics. Vijay Ayyar, head of the Asia-Pacific region of the Luno crypto exchange, believes that the strengthening of bitcoin will lead to a decrease in gold capitalization, which will provoke an explosive growth in cryptocurrency prices.
“We are looking at Bitcoin over the next three, five, ten years, gradually decreasing the market capitalization of gold,” he added..
As soon as the capitalization of gold begins to decline, Bitcoin will cost significantly more than $ 50 thousand, Iyar said. The price of the leading cryptocurrency, meanwhile, is trying to stay above the $ 30 thousand level.
Bitcoin has already slipped below that level, but rebounded almost immediately due to buying pressure. Read about whether Bitcoin will be able to push off from the area of $ 30 thousand in a special material from BeInCrypto.
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