Bitcoin News: DBS, Singapore’s largest bank, may prefer Bitcoin over the US dollar as a store of value.
“Bitcoin is a more effective store of value than the dollar”
The DBS Chief Investment Office recently released a note indicating that Bitcoin is a more potent store of value asset than the dollar.
DBS argues that as global central banks continue to inject fiat supplies into the economy, Bitcoin could offer an alternative for investors who don’t want to be at the whim of lowering the dollar’s value.
The note includes the following statements:
“When we look at the exponential increase in bitcoin prices, we see that only the largest global central banks in the world are competing with the rapid expansion in their balance sheets. This expansion includes the US Federal Reserve, the European Central Bank (ECB), the Bank of Japan (BOJ) and the People’s Bank of China (PBOC).
Such trends will unquestionably drive demand for alternative currencies, even potentially “unconventional digital forms that could represent a store of value more faithfully than the physical dollar.”
In its assessment, DBS states that Bitcoin’s decentralized nature and limited supply are working together to make it a powerful store of value option for investors. The team points out that due to the scarce supply, Bitcoin is more aptly described as a crypto commodity and in this case it can be easily transferred.
“You can diversify your portfolio with BTC”
The bank adds that Bitcoin appears to have a low correlation with other assets, meaning it can help investors diversify their portfolios.
However, DBS acknowledges that Bitcoin has scaling issues as it relies on the proof-of-work (PoW) mechanism that requires an enormous amount of energy to validate transactions. The energy that the network uses for transactions and Bitcoin mining is among some of DBS’s concerns.
Recently, Tesla CEO Elon Musk announced that Tesla will no longer accept Bitcoin as payment due to environmental concerns about the Bitcoin mining process.
DBS also points out that Bitcoin is a volatile asset that may face regulatory risks in the future, while keeping the possibility of Bitcoin achieving the status of a trusted asset beyond the control of the state.
According to DBS, Bitcoin could lead a “monetary revolution” despite having a relatively uncertain future.