Are Asian Investors Shorting Digital Currencies?

Asian markets have been enormously important for the growth of cryptocurrencies in the past few years. China and Japan in particular have fueled gains across the industry in a particularly notable way, and Asian markets tend to dominate many of the largest fiat paths to cryptocurrencies. A recent report by Coin Telegraph suggests that Bithumb, a Korean exchange, has the highest volume of fiat/Bitcoin trades, constituting around $145 million each day. Bithumb also dominates the conversions between Ethereum and Korean Won, while Chinese Yen is the largest fiat gateway to rival digital currency Litecoin. That being said, though, some Asian investors are pushing back against the rapid growth of the cryptocurrency industry.

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“It’s Not Clear to Me What They Are”

Private banks in Asia seem to be leading the way in building skepticism against cryptocurrency spikes. Richard Jerram, the chief economist for the Bank of Singapore, suggested that cryptocurrencies “don’t have a space in high net worth portfolios. It’s not clear to me what they are. You can understand it as a means of transacting in an efficient fashion but it doesn’t seem to fit the necessary definition of being money or a financial asset.”

Yves Bonzon, the CIO of Julius Baer, stated that cryptocurrency “volatility, to begin with, speaks very much against them being a store of value. They are paradoxically very advanced from a technological point of view but extremely backward, stone-age like in terms of monetary system.”

Client Interest Remains

In spite of harsh criticisms from leaders at important financial institutions, client interest in cryptocurrencies like Bitcoin and Ether is continuing to grow. Clients and potential investors have been inquiring more and more about the possibilities of these new modes of investment. The Bank of Singapore, for instance, saw cryptocurrency-related questions come up with increasing frequency during a month-long tour of Asia. Clients wary of the quick gains offered by some cryptocurrency proponents are looking for answers about transparency in the new industry. For that reason, Crossbridge Connect indicated that it would not be introducing cryptocurrencies to its range of services.

That being said, other analysts believe that private banks may not be the best suited to manage cryptocurrency portfolios. Jehan Chu, a partner at Kinetic Capital of Hong Kong, indicated that “there’s been a 40 to 50 percent increase in the kind of contact” that his firm has received from private banks in the past three months. Still, he acknowledges that many cryptocurrency tokens are quite simply worth nothing. Strategist Kay Van-Petersen of Saxo Bank suggests that a cautious approach is best. He indicates that cryptocurrencies could be “a super alternative, probably not putting more than 3% of your net worth…no one is an expert on [cryptocurrencies] and there are so many unknowns, you aren’t going to get an informational edge.”

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