This article was written exclusively for Investing.com
- A pullback in the digital asset class; Gravity is a powerful force
- The US and Europe are not crypto-friendly; rather, they are foes
- Is Tether really backed by US dollars?
- Tokenizing US dollars with USD Coin
- USD Coin versus Tether: Which is more likely to survive?
If you ask Warren Buffett or his partner Charlie Munger what they think of the recent correction in Bitcoin and the other digital currencies, they would say that the asset class is the equivalent of a modern-day tulip bulb bubble. While the two investors—principles at Berkshire Hathaway (NYSE:BRKa)—are in their 90s and have been consistent in their opinions about the crypto world, other former critics have been very quiet recently or have moved towards hushed acceptance.
A few short years ago, JP Morgan Chase’s (NYSE:JPM) CEO Jamie Dimon called Bitcoin a “fraud” and directly used the tulip bulb analogy for the asset class. He said any trader at his bank caught trading cryptocurrencies would be dismissed:
“I would fire them in a second for two reasons: It is against our rules, and they are stupid, and both are dangerous.”
It appears the rules have changed at the US’s leading banking institution. JP Morgan is now saying that investors can allocate 1% of portfolios to Bitcoin.
Aside from Bitcoin, there are over 8600 other cryptocurrencies in circulation. The top twelve have market caps above $8.5 billion. Two of the top dozen are Tether and USD Coin. Both are referred to as “stable coins.”
That's because Tether and USD Coin are cryptos that track the world’s leading reserve currency, the US dollar. That connection makes them both much less volatile than their crypto peers. However, they do not impact the money supply nor the US Treasury’s control of the traditional US dollar flows.
A PULLBACK IN THE DIGITAL ASSET CLASS; GRAVITY IS A POWERFUL FORCE
After trading up to a high of $58,610 on the nearby futures contract on Feb. 22, Bitcoin fell below the $50,000 level but was back near the high on Wednesday, Mar. 10.
BTC/USD Daily