- Cryptocurrency, according to IMF Director Georgieva, is an asset class rather than a money.
- Georgieva is still wary about the US dollar’s competition with cryptocurrencies even after the introduction of ETFs.
- Analysts see asymmetric upside potential, thus they urge investors to welcome Bitcoin declines.
The International Monetary Fund’s (IMF) managing director, Kristalina Georgieva, gave a tough warning to the crypto industry just as the U.S. Securities and Exchange Commission (SEC) granted clearance for Bitcoin spot exchange-traded funds (ETFs).
The Distinction of Georgieva: Cryptocurrency as an Asset Class, Not a Currency
In an exclusive interview with Yahoo Finance, Georgieva underlined a clear contrast between cryptocurrencies and traditional forms of money. She highlights that different cryptocurrencies have varied levels of risk and security based on whether or not they are backed by assets, arguing that cryptocurrencies should be seen as an asset class. Georgieva continued, saying, “It’s more like a money management fund.” as an alternative to considering cryptocurrencies as actual money.
An further degree of interest to Georgieva’s perspective is added by the timing of her remarks, which came only hours before the SEC approved the 11 spot Bitcoin ETFs. With the regulatory permission, the cryptocurrency market has reached a major turning point. Big financial players like BlackRock and Cathie Wood’s Ark may now launch exchange-traded funds (ETFs), giving regular investors access to Bitcoin without having to buy it directly.
Georgieva’s Wariness in the ETF Boom
Though there has been much celebration in the cryptocurrency world since the ETF was approved, Georgieva is still wary of the possibility that cryptocurrencies would displace fiat money, especially the US dollar. She highlighted the dollar’s hegemony and attributed it to the size and strength of the American capital markets. According to Georgieva, every situation in which cryptocurrencies outperform the dollar is a distant future concern, not an immediate threat.
Analyst Suggestion: Accept the Decline in Bitcoin
Following the approval of the ETF, experts in the field predict a sharp increase in cryptocurrency investments. Investors should seize any little declines, according to Bernstein’s Gautam Chhugani, who highlights Bitcoin’s asymmetric upside potential. Investors should “buy the dip” and concentrate on the current bitcoin adoption cycle, he said.
Alesia Haas, Chief Financial Officer of Coinbase, on the other hand, believes that the approval of the ETF would work as a trigger to draw trillions of dollars that would not have been able to access cryptocurrency assets before.
Bitcoin’s Reaction: A Retreat Following Approval
After the ETFs were approved by the SEC, Bitcoin has pulled back; it is presently trading at $42,700, down 6% from the previous seven days. The ETFs’ long-term effects on Bitcoin’s price and the broader industry remains uncertain, leaving the crypto community and investors eagerly awaiting further developments.
Disclaimer: Please note that the viewpoints and perspectives expressed by the author, as well as any individuals referenced in this article, are intended solely for informational purposes. They should not be construed as financial or investment advice. It’s important to acknowledge that investing in or trading cryptoassets carries inherent financial risks.