Yves Bonzon, CIO (Chief Investment Officer) of the Swiss private bank Julius Baer, conducted a analysis of the behavior of digital assets and their impact on the marketswhich they shared with Cointelegraph en Español through a statement.
Bonzon begins by highlighting the fact that “The events that led to FTX’s bankruptcy protection filing are slowly coming to light, giving us an understanding of how similar the situation digital assets are facing to that of the financial system in 2008”.
“This makes now the time to take a constructive but cautious approach. Constructive because the innovation potential of the blockchain is considerable. Cautious because we are aware that these assets are very sensitive to liquidity, as the fall in the first half of 2022 has shown”, they pointed out from Julius Baer.
Yves Bonzon declared: “So now even the most ardent supporters of blockchain admit that it will take time to recover from the recent crashes. The sector will evolve towards greater regulation and convergence with the centralized financial system, in which many business models will have to adapt to the digitization of assets”. He further added: “Thus, Bitcoin will once again be the original native token, while the value of other tokens such as Ether is bound to appreciate, albeit with great volatility in the process of finding its equilibrium price.”.
Yves Bonzon, CIO of Julius Baer
“The events that led to FTX’s bankruptcy protection application are slowly coming to light, allowing us to understand how similar the situation facing digital assets is to that of the financial system in 2008, whose crisis culminated in the bankruptcy of Lehman Brothers. Ironically, digital assets were born precisely from the idea that governments and the international financial system are not trustworthy. In other words, encrypted assets on a blockchain were precisely meant to kill off counterparty risk. The only good news at this point is that the basic principle is not in question. Investors who keep their digital assets in a decentralized personal wallet to which only they have the keys can rest easyBonzon stated, adding:Instead, those who held cash or tokens at FTX face a lengthy liquidation process with little prospect of recovering any significant portion of their assets, given the disclosed figures on the assets and debts of FTX and its affiliates. We are talking about a deficit of about 8,000 million dollars and a million customers trapped in this operator based in the Bahamas. Is this crisis the death sentence for digital sets? What conclusions can we draw at this point? For our part, we have taken a constructive but cautious approach to digital assets thus far. Constructive because the innovation potential of the blockchain is considerable. Cautious because we are aware that these assets are very sensitive to liquidity, as the fall in the first half of 2022 has shown”.
At this stage, even the most zealous supporters of blockchain technology admit that it will take time to recover from recent crashes.
The sector seems to be evolving towards greater regulation and convergence with the centralized financial system, in which many business models will have to adapt to the digitization of assets.
Bonzon remarked: “Bitcoin will once again be the original native token, digital gold. However, keep in mind that historical risk/return analysis of gold is cruel. In fact, gold generated a return equal to that of a US treasury bill with as much volatility as government equities. Tactically, when the Federal Reserve eases monetary policy again, Bitcoin will respond, as before, to the easing of liquidity conditions, but probably to a lesser extent, as we expect less speculative money flows than in the cycle that peaked. maximum in 2021, and hence a more moderate “liquidity beta””.
“Strategically, we believe there is more potential in yielding assets, such as the S&P 500, versus gold. However, the debate between the latter and Bitcoin is still open. In the case of other tokens, such as Ether, which allows digital contracts to be negotiated, their final value depends on the discounted value of future cash flows of the applications developed on their network, which are impossible to assess at this time. However, its value is destined to appreciate, albeit with great volatility in the process of finding its equilibrium price.”, concluded the CIO.
Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
It may interest you:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the entire amount invested may be lost. The services or products offered are not directed or accessible to investors in Spain.
