The fundamental case for Bitcoin remains weak – UBS
Bitcoin is up 0.2% year to date, as of 15 January, following a rise of 157% in 2023. Economists at UBS analyze the cryptocurrency outlook.
Case for Bitcoin remains weak, despite US green light
The US Securities and Exchange Commission (SEC) last week approved the first exchange-traded funds (ETFs) that invest directly in Bitcoin, broadening access to the largest cryptocurrency for investors. But while the approval improves access and makes it easier to store digital assets safely, the fundamental case for Bitcoin remains weak.
Real world applications for cryptocurrencies remain limited.
Cryptocurrencies can significantly raise a portfolio’s volatility. Even a 10% allocation to Bitcoin in a balanced portfolio would drive about 50% of the volatility in this wealth strategy, based on our analysis of the past decade. Bitcoin has also been a poor diversifier, tending to move in the same direction as the stock market with significantly higher volatility.
Concerns remain over sustainability – given Bitcoin’s high energy consumption – which increases as prices rise.
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