- The Bank of Singapore said that crypto may replace gold as a store of value.
- However, Chief Economist Mansoor Mohi-uddin said that for this to happen, crypto must first address various concerns.
- On the other hand, the Bank of Singapore added that crypto will probably not replace fiat money as a medium of exchange.
The Bank of Singapore appears to have joined the bandwagon, as it is one of the latest institutions to declare that crypto may replace gold as a store of value.
According to an article by The National, crypto may indeed become the new gold once it has addressed various concerns.
Chief Economist Mansoor Mohi-uddin explained,
First, investors need trustworthy institutions to be able to hold digital currencies securely. Second, liquidity needs to improve significantly to reduce volatility to manageable levels.
However, the bank cautions potential investors, as cryptocurrencies can be very volatile. For example, Mohi-uddin cited that Bitcoin rallied to $40,000 from $4,000 last year. After reaching $40,000, Bitcoin retreated to $30,000. At the time of writing, Bitcoin price is at $32,057.33, according to CoinGecko.
Moreover, Mohi-uddin said that BTC is correlated with stocks and other risk assets. Instead of a safe haven, investors tend to dump cryptocurrencies during a market crisis.
To be fair, Bank of Singapore admitted that the entering of institutional investors has helped curb crypto’s volatility. Furthermore, changes in price tend to happen more due to “fundamentals than speculation”.
On the other hand, the financial authority said that it is unlikely for crypto to dethrone fiat money as a medium of exchange. Also, governments need to watch out for criminals who might use crypto for illicit means.