Bitcoin is traded as a speculative asset, not as a currency: Morgan Stanley | coindesk JAPAN

Concerns about American banks are mounting, but this should be Bitcoin’s (BTC) ‘shining moment’, and private wallet holders of the largest cryptocurrency should be protected from counterparty risk. , Morgan Stanley said in a March 13 research report.

Bitcoin was designed as a way for people to store value in a private digital wallet without the need for an intermediary to store value or enable transactions, Morgan Stanley notes.

In reality, however, “Bitcoin is not independent of the traditional banking system,” and BTC’s price is “underpinned by the liquidity of U.S. dollar banks, trading more as a speculative asset than as a currency. ‘ said the report.

Analysts Sheena Shah and Kinji Steimetz said, “Central bank monetary expansion will lead to a sharp rise in crypto-asset prices in 2020/21, pushing capital out of traditional fiat banking. I started to move from the world of crypto assets to the world of crypto assets.”

The Bitcoin network can operate without banks, but BTC’s price, or purchasing power, will continue to be influenced by central bank policies and will need banks to facilitate inflows into the cryptocurrency market, Morgan Stanley said. .

Bitcoin’s reaction to negative news has changed in recent days, with the report seeing it surged nearly 20% on the 13th after the Federal Reserve (Fed) and Treasury Department said they would help the banking sector. ing. However, last week’s high uncertainty led to a drop along with risk assets and bank stocks, which traded as speculative assets.

Had Bitcoin traded on its core value proposition of ‘becoming your own bank’, Bitcoin would have risen amid heightened bank uncertainty,” the report said. I am adding.

Price movements suggest that early-week gains were driven by a small number of market participants, likely aided by a short squeeze as opposed to a “fundamental change in trading dynamics,” he said.

Shorting is betting that the price of an asset will fall. An investor borrows a security and sells it in the hope that the price will fall. The investor then buys back the security, returns it to the lender, and takes the price difference. A short squeeze occurs when the price of an asset rises and investors with short positions are forced to cover their positions at the risk of loss.

｜Translation: coindesk JAPAN
｜Editing: Toshihiko Inoue
｜Image: Shutterstock
｜Original: Bitcoin Isn’t Trading as a Currency, but as a Speculative Asset: Morgan Stanley