S&P Global says cryptocurrencies have become and appear to remain mainstream as more companies offer crypto services and global adoption increases. Meanwhile, an S&P analyst believes bitcoin’s rise is reminiscent of the US gold rush.
S&P Global says Bitcoin has gone mainstream
Financial information and analysis firm S&P Global released a special report last week on the current state of cryptocurrencies. There stands that:
Once considered an alternative trend, cryptocurrencies have gone mainstream and seem to be here to stay.
The report points to a number of factors, such as old banks that “are looking more closely at the asset class that can be integrated into the product and service offering” and companies such as Paypal that will start offering cryptocurrency services. Cryptocurrency adoption is also growing in countries where people are “trying to protect their income from inflation and currency controls” or for faster and cheaper remittances.
Additionally, Jim Wiederhold, S&P Global’s associate director for commodities and real assets, wrote an op-ed on bitcoin last week. He wrote:
The recent enthusiasm for bitcoin is reminiscent of the Gold Rush in the western US of 1848-1860 … The American enthusiasm for gold exploded during this period.
The analyst explained, “Recently, the parallels between the two assets have widened.” He noted that both are scarce, “have the potential to be kept out of conventional financial markets,” and are good inflation hedges. In addition, they are “not correlated with other popular asset classes in portfolios.” However, he pointed out that bitcoin’s volatility has been several times higher in the past five years than other asset classes.
He pointed out the differences between gold and bitcoin, including the stock limit, and continued, “Concerns about bitcoin theft were high a few years ago; although as bitcoin becomes more mainstream, these concerns are fading. Although there are still lingering technology and counterparty risks. “
The analyst concluded that while gold is a more established asset, bitcoin is “in its infancy, but it is slowly becoming more accessible to mainstream investors.”
According to S&P Global’s special report:
Cryptocurrency may seem like a niche or experimental segment for these companies, but industry experts say they are treating it more and more seriously.
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