Following the chairman of the Bank of England, who warned the leading players in the banking industry about the “reputational risks” of working with digital assets, a representative of the leading British financial firm, who believes that the market will continue to lose its supporters, joined in criticizing the crypt.
As reported by Express.co.uk, the head of the investment strategy of Barclays Smart Investor Will Hobbs believes that the rise in prices of cryptocurrency can be explained solely by “speculative fever”.
“The fever surrounding the cryptocurrencies came and went along with the prices. For all time since the rise of several hundred percent in 2017 to the subsequent drop of bitcoin by 70 percent relative to the peak there were no commensurate or even visible changes from the fundamental prospects of the cryptocurrency. The same is true for most of the assets of this group,” he said.
Traditional financial institutions in the UK, as a rule, are skeptical of cryptocurrencies. Barclays, at a certain stage, even studied the possibility of launching its own department for trading cryptocurrencies, but later postponed this idea. Shortly before the appearance of information about the plans of Barclays, the analyst of the bank compared bitcoin with an infectious disease.
“As the majority of the population becomes holders of the asset, the proportion of the population that can move into the category of buyers – potential carriers of the virus – is falling, while the proportion of the population ready to move to the category of sellers – convalescent – is growing. In the end, this leads to an end to the price increase, and the number of random shocks that change the ratio of sellers and buyers increases, after which the price begins to fall. This leads to an increase in the speculative pressure of sellers, which in turn leads to an exponential reduction in the price,” he said.
At the same time, Barclays cooperates with the American exchange Coinbase and operates its account, while many banks are in no hurry to enter into agreements with cryptocurrency companies.
This, however, does not prevent Hobbs from criticizing the cryptocurrency market: “We continue to assert that many cryptocurrencies do not have their place in the world economy, because of what their internal value is significantly behind the current levels of trading. In many cases, this role is still illusory, and the idea that in the future there may be a “bitcoin standard” is not economically viable.”
“None of the cryptocurrency currently satisfies any of the criteria that we pay attention to when assessing is suitable for investing in the asset class. We will continue to recommend treating them with extreme caution. The flight from the cryptocurrency has not ended yet,” he added.