![\"Should](\"https:\/\/www.cryptocabaret.com\/wp-content\/uploads\/2021\/01\/ubs-bitcoin-768x432.jpg\")
<\/p>\n<\/p>\n
Switzerland\u2019s largest bank, UBS, has published guidance for clients about investing in bitcoin. The bank answers some important questions, such as whether one should buy bitcoin and other cryptocurrencies and whether bitcoin can be used to diversify portfolios.<\/strong><\/p>\n UBS published a detailed report about bitcoin last week. It answers some questions that the bank is currently discussing with its clients, explained the report authors, including the firm\u2019s chief investment officer of global emerging markets, Michael Bolliger. UBS Group is currently Switzerland\u2019s largest bank by total assets, followed by Credit Suisse Group.<\/p>\n The first question UBS answered in its report entitled \u201cThe rise of bitcoin\u201d was \u201cShould I buy?\u201d The report explains that \u201cMany clients are asking whether they should invest in bitcoin and other cryptocurrencies,\u201d adding:<\/p>\n Our general guidance is this: While we wouldn\u2019t rule out further price increases, we\u2019re somewhat skeptical of any essential real-world use cases, which makes it hard to estimate a fair value for bitcoin and other cryptocurrencies.<\/p>\n<\/blockquote>\n \u201cWe are also cognizant of the real risk of one losing one\u2019s entire investment. Investors in cryptocurrencies must therefore limit the size of their investments to an amount they can afford to lose. We also suggest thinking about an exit strategy,\u201d the report authors elaborated.<\/p>\n While admitting that \u201cIndeed, prices [of cryptocurrencies] could continue to climb in the near term,\u201d the authors warned that \u201cThere is little in our view to stop a cryptocurrency\u2019s price from going to zero when a better designed version is launched or if regulatory changes stifle sentiment.\u201d<\/p>\n Another important question UBS answered was whether bitcoin can be used to diversify portfolios. This subject \u201chas become a key argument for investors,\u201d the report emphasizes. Noting that \u201ccorrelations spiked substantially in 2020 with the outbreak of the pandemic, but have normalized since,\u201d UBS explained:<\/p>\n While empirical evidence is mixed, bitcoin has had an overall low correlation to a wide range of other asset classes, including bonds, stocks, the Swiss franc, and gold.<\/p>\n<\/blockquote>\n <\/ins> <\/ins> <\/p>\n The bank also highlighted that both institutional and retail investors are buying bitcoin. The reasons for buying include bitcoin being an attractive investment opportunity, a hedge against depreciating fiat currency, and FOMO.<\/p>\n\u2018Should I buy\u2019 Bitcoin? UBS Answers<\/h2>\n
\n
Can Bitcoin Be Used to Diversify Portfolios?<\/h2>\n
\n