28. September 2023

Bitcoin risk fades, says CoinShares chairman

According to Danny Masters of CoinShares, Bitcoin’s risk due to its volatility has disappeared by 2020.

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According to statements by CoinShares‘ president, Danny Masters, the main risk associated with Bitcoin is not having that cryptomontage. During an interview with CNBC, he stated that the feeling related to that digital currency, is „electric“.

According to his position, the vision of the pioneering cryptomone currency as a risky asset for investors has changed. Now, by contrast, for a portfolio manager, there is a potential danger if he does not own a certain investment in Bitcoin.

For Masters, who served as a former JPMorgan commodity trader, Bitcoin is an asset that has become increasingly trusted. This explains why dozens of institutional investors, rather than turning away from cryptomoney in times of crisis, are actively seeking it out.

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The risk is in other assets rather than in Bitcoin
The time when Bitcoin was presented as a risky investment, due to its volatility, seems to be behind us. „The professional risk of having Bitcoin in an institutional portfolio, as an administrator of the portfolio, is rapidly migrating to a professional risk of not having Bitcoin in the portfolio. This is a really surprising development,“ he explained.

At the same time, CoinShares‘ chairman believes that Bitcoin’s volatility is not a source of nervousness for investors. This is due, in his view, to the fact that other assets are even more volatile than the crypt-currency itself.

„The volatility of other asset classes, has proved to be much higher than people expected,“ he stressed in that regard. The most popular of the digital currencies, it has a maturity index that it did not have before, which gives a good image in front of all types of investors, he said.

For him, Bitcoin’s stigma of volatility has been lifted from major investors. He also stressed that the question is not whether companies will open up to Bitcoin or not, but when and to what extent.

The environment is less and less affected by the crypto currency

An important aspect that, according to Masters, minimises the risk of Bitcoin, is that it no longer wobbles from external shocks. In a report published by the firm in October, he stressed that, at other times, a case like BitMEX would have meant a resounding fall for the currency.

The economic collapse caused by the COVID-19 pandemic only strengthened the cryptomoney. On the other hand, Trump’s statements, threats and attacks by regulators such as BitMEX and the hacking of KuCoin, do not seem to have damaged Bitcoin’s momentum.

„I was surprised by the lack of negative price movement,“ he explained, referring to the cases mentioned. On the contrary, he points out that the level of greed surrounding Bitcoin has increased considerably.

Events that would otherwise have led to a massive sale are being responded to by more investors. At the same time, a large number of investors are on the lookout for Bitcoin’s price to fall in order to invest large sums, which excludes any hint of risk.

This could explain why, after each correction, the price rises in a very short time.

Things to consider
During an interview with CNBC, the president of CoinShares assures that it is more risky not to have Bitcoin than the opposite.
In his view, Bitcoin’s volatility doesn’t make investors nervous because other assets are even more volatile.
The level of greed has not diminished despite external events that would otherwise have affected the price of the currency.
Bitcoin, he explains, has already shed the old stigma of representing an investment risk.