The past year has seen Bitcoin emerging as one of the best-performing asset classes. This has encouraged several investors and financial institutions to pay serious attention to the world’s most valuable cryptocurrency.
Institutional investors have also lined up in large numbers to participate and have their share of the market’s growth.
However, some institutions and organizations have refused to throw caution to the winds. Some agencies have already warned about the high volatility in the cryptocurrency industry, with both U.S. and New Zealand’s financial watchdog’s warning that crypto holders could lose all their money.
Wealth management firm UBS Global has echoed that warning, stating that crypto could end having a similar story as MySpace.
In the early 2000s, MySpace was the go-to platform, and the real definition of social media revolution before Facebook was even conceived. The platform at one time surpassed platforms like Google and Yahoo when it comes to user-base and number of new monthly users.
But Myspace didn’t last long, as the platform died a natural death, no thanks to several factors.
UBS Global Wealth management is now cautioning crypto investors about the risk they are getting themselves into, pointing out that crypto could go to zero-level.
Bitcoin could lose its appeal
According to the firm, the speedy rise of crypto assets means that they can also go in the reverse direction at the rate they went up, which could go as low as a zero value.
Analysts at UBS are warning crypto investors to be careful how they rush into taking a long position with Bitcoin and other cryptocurrencies. According to the analysts, Bitcoins could lose their value and appeal just as it was with Netscape and Myspace during the early days of a social media revolution.
They said regulatory actions on Bitcoin could lead to the complete doom of Bitcoin, or it could lose its allure when a better-designed version is launched.
“There is little in our view to stop a cryptocurrency’s price from going to zero when a better-designed version is launched,” UBS stated.
Government-backed crypto could eclipse Bitcoin
UBS further explains that a powerful western government could launch a rival cryptocurrency that could surpass Bitcoin when it comes to the transaction value and more credibility. And since Bitcoin is having serious regulatory issues and is not currently owned by any government, it could bring its value to zero.
Most regulators are looking at Bitcoin with negativity, because of its high volatility. As a result, the crypto asset has not really scaled past its projected level of adoption. According to UBS, this problem could give rise to the development of another rival cryptocurrency that may not have these issues. As a result, the new asset may draw massive adoption, which could signal the end of Bitcoin, UBS reiterated.