Bridgewater’s director of investment research Rebecca Patterson has said that bitcoin could become digital gold if the cryptocurrency’s volatility drops and its liquidity improves with “regulatory certainty.”
Patterson’s words came during an interview with Bloomberg, first reported on by Business Insider. During the interview, Patterson revealed she would not call bitcoin an “alternative currency” and argued instead the flagship cryptocurrency would be better compared to gold as a store of value.
She added she believes bitcoin has the potential to become “digital gold,” but only after problems associated with its volatility, liquidity, and regulatory status are resolved. Patterson pointed out that as institutional investors they can’t say “with confidence yet” bitcoin will be digital gold.
The flagship cryptocurrency has value to investors as a hedge against fiat currency inflation, as investors eye crypto while worrying about fiat currencies losing their value with “all this central bank printing.” To trigger Bridgewater to invest in the cryptocurrency, she wrote, a few things would have to improve.
Per the executive, Bridgewater would need to see its volatility drop as “right now bitcoin can move 10% on a tweet, that’s not exactly a store of wealth for most institutional investors.” Moreover, the firm would need to see greater liquidity, which she believes may come from “regulatory certainty.” She said:
The more you get a real regulatory ecosystem developing around bitcoin and other currencies, the more other types of investors are going to be comfortable coming in, that’s going to bring the liquidity, that’s going to reduce the volatility.
It’s worth noting most analysts believe regulators stepping in could hinder bitcoin’s growth. This month, Treasury Secretary Janet Yellen claimed bitcoin is “an extremely inefficient” way to conduct monetary transactions.
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