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UBS Executive Downplays Bitcoin’s Ability to Replace Fiat

Criticisms against Bitcoin have been rather rampant in the past few days, with some capitalizing on its recent slump to hammer its perceived drawbacks. In […]

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Criticisms against Bitcoin have been rather rampant in the past few days, with some capitalizing on its recent slump to hammer its perceived drawbacks. In a recent Bloomberg interview, Paul Donovan, the Chief Economist at UBS Global Wealth Management, explained why he believed that digital assets would be unable to replace fiat currencies.

Volatility and a Deflationary Monetary Policy

In the interview from earlier this week, Donovan explained that cryptocurrencies wouldn’t be able to replace fiat currencies because of their generally fixed supply. Unlike fiat currencies, digital assets can’t function as stores of value, and they don’t offer the same levels of certainty.

Donovan particularly hammered the point of fixed supply, explaining that the number of assets like Bitcoin in circulation can’t be reduced if demand drops. In part, he explained:

“A proper currency can be a stable store of value, providing certainty that it will be able to buy the same basket of goods tomorrow as it buys today. That confidence is derived from central banks’ ability to reduce supply when demand is falling. There is no such mechanism for switching off supply on most cryptocurrencies”

Donovan also harped on the ages-old argument that cryptocurrencies are too volatile. As he explained, people won’t be sure of what they can buy with a cryptocurrency unit tomorrow. So, they will be less comfortable with using it as a currency.

Bitcoin’s monetary supply has been one of its many strengths, with many pointing out that its resistance to inflation makes it the ideal global reserve currency for a 21st-century economy. The asset’s fixed monetary policy is essentially the reason for the institutional investment push that has sustained the market for the past year.

If It Ain’t Broke, Don’t Fix It

While Donovan’s criticism might seem harsh, it is worth noting that Bitcoin has never reached a point where demand became alarmingly low. The asset has amassed a significant number of believers, and these people are waiting to ride out any storm. If the crypto winter couldn’t crash the asset entirely, hardly will anything else do so.

As for the volatility argument, this isn’t the first time a critic will raise the point. Just this week, Gerald Moser, the Chief Strategist at top British bank Barclays, told Financial News that Bitcoin’s volatility made it an “uninvestable asset.”

In his interview, Moser explained that investors wouldn’t be able to add Bitcoin to their portfolios and make projections because it is just too volatile. He added that the leading cryptocurrency’s recent rally was primarily due to a growth in retail investors instead of institutions who would be able to sustain the market for the long term. Moser appears to have been wrong on that note, with several metrics pointing to a surge in institutional crypto investment.

Source: https://insidebitcoins.com/news/ubs-executive-downplays-bitcoins-ability-to-replace-fiat

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NEXT Chain: New Generation Blockchain With Eyes on the DeFi Industry

[Featured Content] The cryptocurrency industry is booming throughout the past year, and the increase in the total market capitalization is definitive proof. The market is, at the time of this writing, valued at about $1.5 trillion. The same can be said about the DeFi industry. The total value locked in various protocols exceeds $39 billion, […]

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[Featured Content] The cryptocurrency industry is booming throughout the past year, and the increase in the total market capitalization is definitive proof. The market is, at the time of this writing, valued at about $1.5 trillion. The same can be said about the DeFi industry. The total value locked in various protocols exceeds $39 billion, […] Checkout PrimeXBT
Source: https://cryptopotato.com/next-chain-new-generation-blockchain-with-eyes-on-the-defi-industry/

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Billionaire Hedge Fund Manager and a Former CFTC Chairman Reportedly Invested in Crypto Firm

The hedge fund manager who predicted BTC’s rise to $40k in 2018 and the former CFTC Chair, a.k.a ‘crypto dad’, have invested in BlockTower Capital.

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The hedge fund manager who predicted BTC’s rise to $40k in 2018 and the former CFTC Chair, a.k.a ‘crypto dad’, have invested in BlockTower Capital. Checkout PrimeXBT
Source: https://cryptopotato.com/former-cftc-chairman-and-a-billionaire-hedge-fund-manager-reportedly-invested-in-crypto-firm/

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Bitcoin Price Analysis: Back Above $50K, But Facing Huge Resistance Now

Bitcoin is up by a solid 6% today as the primary cryptocurrency surged by over $3000 over the past 24 hours. Quick recap: bitcoin is recovering after a heavy correction over the past week, in which the cryptocurrency dropped by around 25% as it broke beneath the February ascending price channel (as shown on the […]

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Bitcoin is up by a solid 6% today as the primary cryptocurrency surged by over $3000 over the past 24 hours. Quick recap: bitcoin is recovering after a heavy correction over the past week, in which the cryptocurrency dropped by around 25% as it broke beneath the February ascending price channel (as shown on the […] Checkout PrimeXBT
Source: https://cryptopotato.com/bitcoin-price-analysis-back-above-50k-but-facing-huge-resistance-now/

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Institutional Investors Continue to Buy Bitcoin as Price Tops $50K: Report

Institutional investors bought the dip last week and have withdrawn $630 million in BTC from Coinbase in one day, says on-chain data.

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Institutional investors bought the dip last week and have withdrawn $630 million in BTC from Coinbase in one day, says on-chain data. Checkout PrimeXBT
Source: https://cryptopotato.com/institutional-investors-continue-to-buy-bitcoin-as-price-tops-50k-report/

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