Swiss Bank UBS Details Alternative Crypto Investment Strategies
Switzerland’s largest bank, UBS, published a research note last week suggesting alternative investments to the direct purchase of crypto.
In the note, the analysts explained that “direct exposure to cryptos is highly speculative.” They added that Bitcoin’s latest crash of almost 40% since its all-time high in November, 2021, “has undermined two of the most common defenses of the asset class.”
The UBS analysis explains:
“The first is that it provides an effective form of diversification from traditional financial assets, such as equities … Second, it is getting harder to see cryptos as a form of ‘digital gold’ that provides protection against elevated inflation.”
The UBS analysts highlight that, although direct exposure to crypto assets remains highly speculative, “it does not mean that the technology underlying digital assets holds no promise for investors.” The report reads:
“We see a range of possible applications — from financial services and healthcare to luxury goods — leading to a potential USD 1 trillion boost to global GDP over this decade.
There are several main ways investors can access this potential while avoiding the high volatility and regulatory risks of holding Bitcoin or rival cryptos.”
Specifically, the analysts discuss two strategies. The first one is to invest in companies that provide the infrastructure for the crypto ecosystem. They stated:
“The growth of DLT applications will require more hardware to validate the activities on the network, including application-specific integrated circuits (ASICs), application processors, and graphics processing units (GPUs). Other enablers include software makers and data center-related companies that help build the overall infrastructure.”
The second strategy with even more potential, the UBS analysts noted, are businesses adopting DLT-applications:
“An even bigger opportunity, in our view, sits with the platform companies that can embrace DLT-based applications.”
Adding:
“As the technology is increasingly used over the next 5–10 years, we see opportunities from the introduction of new product services and categories, possible savings from the use of technology, potentially lower prices, and an overall improvement in business efficiency.”
The Swiss Bank’s report concludes:
“These companies span different industries like internet, fintech, software, IT services, consumer services, and insurance, and can wield digital asset technology to offer a breadth of services like payments, trade finance, custodianship, supply chain management, automation, and consulting.”
Not so long ago, UBS warned its clients to “stay clear of crypto“, considering it a bubble and not suitable for professional investors.
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Source: igaming
