When Morgan Stanley acquired a 10% stake in MicroStrategy a month ago, he was in fact indirectly exposed to Bitcoin (BTC). The prestigious bank’s position on the subject of cryptography has become clear since the last release of the Why Crypto Is Coming Out of the Shadows report. Written by Ruchir Sharma, Head of Emerging Markets and Chief Global Strategist at Morgan Stanley, the report identifies cryptography as an important asset class to be relied upon.
Massive adoption, especially among young people
The market for cryptomoney is certainly one of those that will have benefited most from the covid-19 pandemic, both in terms of visibility and utility. It is on this implacable observation that Mr. Sharma began his presentation of the facts stating that: « Despite the natural nervousness of a global pandemic, cryptomoney is rapidly gaining popular support as an alternative to gold (a store of value) and the dollar (as a means of payment) ». Based on this, he concludes that, « whatever the next price of Bitcoin, cryptomoney is here to stay as an important asset class.
The strategist proposed two fundamental reasons that would justify such a prediction for the future of cryptomoney. He began by mentioning the generational aspect, saying that the adoption of these assets was impressive among young people. « The worst blow to cryptonics as a store of value is its volatility, but the unwavering demand for millennia has helped reduce Bitcoin’s volatility, even during the pandemic, » he said. He went on to add that these young people consider that the technology behind Bitcoin made it « more transparent, transferable and reliable than government-printed paper money.
The Decline of Currencies in Favour of Bitcoin
The second reason is the growing mistrust of fiat currencies following the massive printing of money by central banks. Indeed, a large amount of dollars were printed and poured into the economy to keep them afloat during the pandemic. According to Mr. Sharma, this strategy has resulted in the tarnishing of the fiduciary currencies of all the major economic powers to the benefit of the cryptomoney industry.
Another consequence of this disastrous policy has been to reinforce the idea that Bitcoin could replace the dollar as the reference for means of payment. « Today, virtually all Bitcoin is held as an investment, not used to pay bills, but this is changing. Last year, popular payment platforms began accepting Bitcoins and other digital currencies, which was a major step forward in their campaign to challenge the dollar, » Sharma concluded.
With such exposure, it would not be surprising to see Morgan Stanley increasing its exposure to Bitcoin before the end of the year. The arrival of the reluctant banks in the meantime should also encourage more people to adopt this asset class.
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