BT Money Hacks: Are digital assets really digital gold?
Lee Kim Siang
THE landscape of cryptocurrency is evolving rapidly, especially following recent developments such as the Federal Reserve’s interest rate cut and the growing acceptance of digital assets among institutional investors. As we explore the current state of crypto, it’s essential to understand the dynamics at play and what they mean for investors.
In this week’s episode, correspondent Howie Lim delves into these issues with Kunal Chowdhry, CEO of Apollo Singapore Investments.
A shift in sentiment towards cryptocurrency
The recent bullish sentiment surrounding cryptocurrencies can be largely attributed to the increasing institutional interest in digital assets. With major financial players like BlackRock and Fidelity launching spot Bitcoin ETFs, there’s a growing recognition of cryptocurrencies as legitimate investment vehicles. This shift is significant, especially considering that previous cycles were predominantly driven by retail investors.
The approval of spot Bitcoin ETFs has acted as a catalyst for institutional involvement in the crypto market. As more traditional finance players enter the space, the perception of cryptocurrencies is changing from speculative assets to integral components of diversified investment portfolios.
The impact of economic factors
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The macroeconomic landscape has also played a crucial role in shaping the crypto market. The initial boom in crypto during the Covid-19 pandemic was fuelled by government stimulus cheques and unprecedented monetary easing. However, the subsequent tightening of monetary policy and interest rate-hikes led to a decline in liquidity, adversely affecting crypto prices.
As interest rates begin to stabilise, there is optimism that liquidity will return to the market, allowing cryptocurrencies to regain traction. The crypto market’s resilience is partly due to the established presence of institutional investors, which helps set a floor for prices and reduces the likelihood of extreme downturns.
Navigating the crypto landscape
For retail investors looking to navigate the volatile world of digital assets, it is important to have a well-defined investment framework. Kunal shares with Howie some key takeaways for prospective investors in the episode.
The future of digital assets
Looking ahead, the outlook for cryptocurrencies remains optimistic, especially with the potential for regulatory clarity. While there are challenges, including ongoing regulatory scrutiny, the presence of institutional investors lends credibility to the market.
Moreover, the anticipated influx of funds from FTX refunds could inject billions back into the crypto ecosystem, further bolstering investor confidence. As more individuals and institutions engage with digital assets, the broader acceptance of cryptocurrencies as a legitimate investment class is likely to continue.
The resurgence of interest in cryptocurrencies is a complex interplay of economic factors, institutional involvement, and evolving market dynamics. The future of digital assets looks promising, provided investors approach the space with diligence and a clear strategy. By focusing on established cryptocurrencies and maintaining a diversified portfolio, investors can position themselves for potential growth in this exciting market.
For more episodes, go to bt.sg/moneyhacks and if you have feedback or an episode idea, please get in touch at btpodcasts@sph.com.sg.
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Written and hosted by: Howie Lim (howielim@sph.com.sg)
With Kunal Chowdhry, CEO, Apollo Singapore Investments
Edited by: Howie Lim & Claressa Monteiro
Produced by: Howie Lim
Engineered by: Chai Pei Chieh
A podcast by BT Podcasts, The Business Times, SPH Media
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