01.08.2021

Barclays analyst recommends staying away from Bitcoin

Over the past year alone, the price of Bitcoin at least tripled, and the main cryptocurrency, among other things, was able to survive the massive panic around the rapid spread of the coronavirus in March.

However, despite this, there are still some well-known market experts who consider BTC a “bad” investment. Gerald Moser, chief market strategist at Barclays Private Bank, said yesterday that investors should stay away from Bitcoin. We will try to explain exactly what he is wrong about, and how his recommendation has already been ignored.

To begin with, let us recall that it is common for bank representatives to criticize Bitcoin and cryptocurrencies in general. They get the hackneyed arguments that BTC is used to launder money and acquire illegal substances, but they prefer not to remember that the main instrument for this is cash in the form of dollars, euros and other national currencies.

For example, in the first half of January this year, representatives of Bank of America again called Bitcoin a “bubble”. Overall, the current global environment is not conducive to investment in general, let alone a “riskier” cryptocurrency, according to the financial institution’s employees.

That is, such statements from bankers are not uncommon. However, against the background of what is happening today in the cryptocurrency niche, they sound very funny. Let’s talk in more detail.

Is investing in Bitcoin a bad idea?

Here is a quote from Moser in a recent interview with the Financial News where he voiced his point of view. The cue is from Decrypt.

While it is almost impossible to predict the expected return on Bitcoin, its volatility makes the asset almost “unusable” from an investor’s portfolio management perspective.

That is, the expert believes that sharp jumps in the cryptocurrency rate exclude the possibility of investing in an asset on the part of large professional investors. However, these seven companies, which have invested hundreds of millions of dollars in BTC, are unlikely to agree with him.

We checked the actual data: now Bitcoin is indeed in a state of correction after the recent rally. Tonight, the cryptocurrency, among other things, dropped to the level of 29 thousand dollars, which has not happened for several weeks. In general, over two weeks, the BTC rate dipped by 20.5 percent. Here is a graph of the asset’s value for the month.

Barclays Private Bank serves high net worth clients. As a private bank, it offers personalized bank accounts and mortgages as well as wealth management services. As of 2019, it was the fourth largest financial institution of its kind in the UK with £ 61 billion in assets under management. And it looks like these billions will not go to the crypto market – such a conclusion can be drawn from another statement of the expert.

The effectiveness of cryptocurrency as an investment vehicle is mainly determined by the fact that ordinary individual investors join the seemingly fast price rally, but there are no long-term investments in the market from institutional players of large organizations.

Moser’s words do not coincide with reality: large companies have begun to actively invest in Bitcoin since the middle of last year. Every month, more and more large companies with world names can be seen in the list of cryptocurrency owners.

This fact also coincides with the recently published data from the Glassnode analytics platform. The company’s experts have recorded a steady decline in the balance of “liquid” cryptocurrency wallets over the past nine months. That is, many BTC owners are constantly moving their coins for long-term storage, which means that most of them are planning to further increase the price of the main cryptocurrency.

Last month, the balance of “liquid” wallets decreased by at least 270 thousand BTC. Accordingly, there are significantly fewer coins in the public domain on exchanges, and this trend is unlikely to stop in the near future. According to analysts’ classification, a crypto wallet is considered illiquid if less than 25 percent of the received BTC was withdrawn from the address during its existence. So this amount is unlikely to be sold in the coming years.

We believe that here the facts speak for themselves – the shortage of bitcoins in the market is increasing slowly but surely. This means that there are not so many free coins, and the less they become, the more desirable Bitcoin will become in the eyes of investors. Therefore, you should not pay attention to the unfounded statements of critics of digital assets during the current stage of growth and count on its end in the near future.

Moreover, such warnings from bankers and other analysts clearly do not work. While they are talking about the cons of Bitcoin, large investors with tight wallets continue to replenish their cryptocurrency reserves and wait for the further development of the market. Judging from previous experience, in the end it will be the latter who will be right.

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