Rebecca Patterson, the director of investment research at Bridgewater Associates, said bitcoin could be better compared to gold than a currency due to the similarities between both assets, thus, supporting the digital gold argument.
Bitcoin As Digital Gold
In a recent interview with Bloomberg, Patterson said she wouldn’t call bitcoin an alternative currency, I think if anything, it’s an alternative to gold or digital gold. I think that would be the better comparison.”
Despite calling BTC an alternative to the precious metal, Patterson added that the cryptocurrency would have to prove its digital gold status.
“As institutional investors, we don’t know yet if it’s going to be digital gold, it may be over time, but I don’t think we can say that with confidence yet. And that affects whether or not our client should own it,” she added.
Regulatory Clarity Needed
Patterson noted that a good regulatory clarity in bitcoin will make it a great investable asset for more institutional investors who are yet to join the trend.
According to her, some of BTC’s biggest problems, including high volatility and low liquidity, are closely tied to the asset’s regulation.
She added that bitcoin’s extreme volatility is the major reason why the founded by Ray Dalio asset manager, has not made any move to join the bitcoin bandwagon.
“Right now, Bitcoin can move 10% on a tweet. That’s not exactly a store of wealth for most institutional investors. So the volatility of Bitcoin is about 10 times that of your dollar.”
The analyst believes that if bitcoin is better regulated, both high volatility and low liquidity will subside, and institutional investors can feel comfortable adding the digital asset to their portfolios.
“The more you get a real regulatory ecosystem developing around Bitcoin and other currencies, the more other types of investors are going to be comfortable coming in, that’s going to bring liquidity, that’s going to reduce the volatility… So I guess if there was one thing I were watching first, it would be seeing more regulatory certainty.”
Rebecca Patterson is not the first to call for regulatory clarity for the leading cryptocurrency. Last month, Christine Lagarde, the President of the European Central Bank (ECB), said that bitcoin requires a unified global regulation to work properly.