The asset-management arm of Bank of New York Mellon (BNY Mellon) believes that Bitcoin is not suitable for the portfolios of most institutional investors for a number of reasons. Bloomberg reports.
The Insight Investment team, with AUM of roughly $1 trillion, pointed to Bitcoin’s high volatility, low liquidity, governance issues and environmental risks.
According to Francesca Fornasari, head of FX solutions, slow and expensive transactions could also hinder broad adoption of Bitcoin. She was skeptical about digital gold serving as a means of payment.
Earlier, BNY Mellon announced the creation of a cryptocurrency custodian. Fornasari noted that launching the service makes sense as digital assets become an increasingly important part of the investment landscape.
However, she expects growth in cryptocurrencies that can challenge Bitcoin in terms of transaction speed and cost, energy consumption and volatility.
Fornasari emphasised that evaluating the leading cryptocurrency is harder than gold because of sharp price swings.
“Ultimately, you must recognise that if you invest in Bitcoin, there is a whole range of different factors and considerations that will affect the value of your investment, having nothing to do with inflation or hedging it,” she concluded.
As previously reported, BNY Mellon acknowledged an incorrect bet by one of its funds on gold, instead of MicroStrategy shares, which had bought Bitcoin.
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