A senior analyst at asset management firm Bridgewater believes that regulation could potentially make Bitcoin (BTC) a good asset for institutional investors.
Rebecca Patterson, Director of Investment Research at Bridgewater, claimed that regulatory security around Bitcoin would solve some of cryptocurrency’s biggest problems associated with high volatility and low liquidity.
In an interview with Bloomberg on Feb.24, Patterson said that issues like volatility and liquidity remain the main hurdles to Bridgewater’s potential move to Bitcoin.
“At the moment, Bitcoin can move 10% in a tweet, which is not exactly a store of wealth for most institutional investors. So the volatility of Bitcoin is about ten times that of your dollar and still twice that of the Venezuelan bolivar, ”the executive said.
Patterson went on to say that both the volatility problem and liquidity problems would subside as Bitcoin became a more regulated asset:
“The more a real regulatory ecosystem evolves around Bitcoin and other currencies, the more other types of investors will feel comfortable. That brings liquidity and reduces volatility.”
“I think if there is one thing that I saw first there would be more regulatory security,” Patterson said, adding, “I’m not sure when that will come in the US.”
Patterson also said that she does not consider Bitcoin an “alternative currency” but rather digital gold. “If anything, it’s an alternative to gold or digital gold. I think that would be a better comparison, ”she said. Patterson said many investors have been waiting for Bitcoin because of inflation concerns caused by central bank money printing. For Bridgewater, however, Bitcoin has yet to prove its status as digital gold:
“As institutional investors, we don’t yet know if it will be digital gold, it may be over time, but I don’t think we can say that with confidence yet. And that affects whether our customer should own it or not. “
