The largest asset manager in Europe, Amundi, has recently stated that crypto regulations could initially have a negative effect on the price of Bitcoin and other cryptocurrencies.
Overseeing more than $1.5 trillion worth of client assets, Amundi holds a significant place in Europe’s asset management and ranks among the top 10 global players in this field.
The company’s deputy CIO Vincent Mortier and head of global views Didier Borowski recently mentioned the G7 regulators’ determination to regulate cryptocurrencies.
According to their statements, such regulations would “initially lead to an adjustment of their price, possibly brutal.” The first phase of crypto regulations could thus quickly bring the BTC price down to “$30,000 or $20,000.” Given that BTC is currently trading at around $52,855, such a drop would be significant.
Borowski and Mortier also argued that cryptocurrencies lack important characteristics that both money and assets have.
On the one hand, they say that, unlike money, cryptos lack the qualities of a store of value, a unit of account, and a medium of exchange. Moreover, they are volatile, not always liquid, and are not legal tender, which makes it more accurate to use the term “crypto-assets” when referring to cryptocurrencies.
On the other hand, cryptocurrencies lack the usual characteristics of other assets such as bonds and stocks since they have “no real economic underlying asset. As a result, there is no valuation model.”
The two also said that cryptos “soared during the Covid-19 economic crisis but haven’t been through an episode of financial stress,” and, therefore, “giving them the same status as gold, ex-ante, when estimating their upside potential is questionable.”
According to the two researchers, crypto regulations represent an “exogenous risk factor” for those interested in buying cryptocurrencies. However, once “the regulatory environment has stabilized, and the relationship with CB [central bank] digital currencies has been clarified,” it is likely for cryptocurrencies to “flourish again.” Their conclusion emphasized that even if cryptocurrencies are promising, they remain speculative in nature.