- The latest cryptocurrency regulations will have a “brutal” effect on the price of cryptocurrencies
- At the initial stage of regulations’ consideration, the current BTC price of $53,760 will drop to $30,000 or $20,000
- Cryptocurrencies aren’t money as they lack the characteristic properties of money, but they don’t hold the usual characteristics of an asset either
- Mortier & Borowski stated that crypto regulation is an “exogenous risk factor” for buyers, but only initially
Europe’s biggest asset manager Amundi, which deals with over $1.5 trillion worth of client assets, has come to a conclusion that at their initial stage, the latest cryptocurrency regulations will prove to be “brutal” for the price of bitcoin as well as other cryptocurrencies.
Mortier & Borowski’s Views
On Wednesday, a report was published by The Block, which mentioned that Amundi’s deputy CIO Vincent Mortier and head of global views Didier Borowski believes the G7 regulators are ruled out in order to regulate cryptocurrencies. Yet initially, such regulations are predicted to have a severe impact on cryptocurrency prices.
Bitcoin Interpretation
Mortier further elaborated that at a time when some regulations just begin being contemplated, the BTC, which is currently being traded at a price of $53,760, will instantly drop to $30,000 or $20,000, since it’s difficult to rule out a “fair price”. As per Mortier and Borowski, the setback seems to discount the BTC or other cryptocurrency buyer of any and all regulatory risks.
Cryptocurrencies are NOT Money
The Amundi strategic duo also pointed out that cryptocurrencies cannot be categorised under money since they lack the three characteristic properties of money; i.e. a unit of account, a store of value, and a medium of exchange. Instead, cryptocurrencies are volatile, not always liquid nor legal tender. And thus, in their opinion, cryptocurrencies should better be considered crypto-assets.
So, are they Assets?
However, they added it doesn’t hold the usual characteristics of an asset either. Unlike other assets like stocks and bonds, cryptocurrencies hold no valuation model, since they don’t have any real economic underlying asset.
On the matter of assets, the cryptocurrency did show great potential to compete with gold but haven’t yet proved itself. Seeing as cryptocurrencies did ride a huge wave during the Covid-19 economic crisis but it has yet to experience an episode of financial stress. So Mortier and Borowski are of the opinion that keeping cryptocurrencies in the same league as gold won’t be just.
As per finance researchers, stablecoins are the most direct competitors to official government-backed currencies, but they can cause a serious quake in the financial system especially if one of them loses its ability to maintain its fixed value.
A Temporary Setback
All in all, the two Amundi representatives stated that the crypto regulation is an “exogenous risk factor” for buyers, but only initially. Once all the Fogg and shadow lingering around the regulations are clear; doubts and risks are addressed and clarified, cryptocurrencies will most certainly flourish again.