Observers of the cryptocurrency industry have been warned not to write off digital assets like Bitcoin (BTC) due to the ongoing ‘cryptocurrency winter’ and market collapses, according to a major European asset manager.
In a thematic paper analyzing the state and the prospects of the crypto market, investment execs at Paris-based Amundi argued that even though BTC failed to protect investors against rising inflation in 2021 and 2022, its limited supply may still attract more attention if inflation remains above the central banks’ targets.
Mortier Vincent and macroeconomist Perrier Tristan of Amundi’s chief investment office outlined five reasons why the recent setbacks in the crypto industry — including collapses of firms like FTX or Celsius — may not mean the end of cryptocurrencies.
The execs argued that the current crisis is likely to bring more realistic expectations from the industry and “separate the wheat from the chaff”, comparing crypto to blue-chip tech stocks, which also experienced wild price collapses before starting to thrive. They also noted that the current market downturn still comes in line with Bitcoin’s historical price cycles.
Ethereum’s successful shift to a proof-of-stake blockchain was used as an example of the industry’s capabilities in reducing energy consumption, while the key value propositions of crypto like decentralization and immutability of transactions have not been touched by the crisis.
Prominent companies in financial and other industries have also not stopped expressing their interest in crypto, with heavyweights like Blackrock acquiring a stake in Circle in 2022.
The execs concluded that regulation will likely bring a more positive impact on the industry despite certainly causing temporary price setbacks. They highlighted that many regulators have eventually preferred to not put a blanket ban on crypto after several attempts, and that advanced economies now see it as a possibility.
Despite expressing some level of bullishness towards the future of crypto, Amundi’s investment executives still noted that the real economic utility of crypto “still needs to be fully confirmed.” That would need a widespread use of public blockchains in the real economy and the associated non-speculative demand, the experts noted.
