In the wake of the recent approval of Bitcoin spot exchange-traded funds (ETFs) in the United States, the International Monetary Fund (IMF) Managing Director Kristalina Georgieva, has offered her perspective on the cryptocurrency market.
While the ETF approval has generated considerable excitement within the crypto industry, Georgieva has expressed critical views about the nature of cryptocurrencies and their potential impact on traditional currencies.
Cryptocurrencies as assets, not currency
In a recent interview, Kristalina Georgieva emphasized the distinction between cryptocurrencies and traditional forms of currency. According to Georgieva, cryptocurrencies should be categorized as an asset class rather than a form of currency.
She pointed out that the security and risk associated with cryptocurrencies vary depending on whether other assets back these digital assets. Georgieva likened cryptocurrencies to money management funds rather than true currencies, stating,
“It’s more like a money management fund.”
Crypto approval amid IMF cautions
Interestingly, Georgieva’s comments came just hours before the US Securities and Exchange Commission (SEC) approved the launch of new spot Bitcoin-backed ETFs.
This regulatory green light allows financial institutions such as Cathie Wood’s Ark and BlackRock to introduce these ETFs, providing average investors a way to gain exposure to Bitcoin without directly owning the cryptocurrency itself. A total of 11 spot Bitcoin ETFs received approval, marking a significant milestone for the crypto industry and signaling growing institutional acceptance.
While the approval of Bitcoin ETFs has been celebrated as a landmark moment for the crypto industry, Kristalina Georgieva remains cautious about the potential of cryptocurrencies to challenge traditional currencies like the US dollar.
Georgieva highlighted the dollar’s dominance, supported by the size of the US economy and the depth of its capital markets. She believes any scenario where cryptocurrencies could rival the dollar’s stature is still far in the future and not an immediate concern.
Industry experts’ optimism and advice to investors
Despite Georgieva’s reservations, industry experts and analysts have expressed optimism about approving Bitcoin ETFs. Gautam Chhugani from Bernstein advised investors to view any minor selloffs as opportunities, emphasizing the asymmetric upside potential of Bitcoin. Chhugani encouraged investors to “buy the dip” and focus on the new Bitcoin adoption cycle.
Alesia Haas, Chief Financial Officer at Coinbase, sees the ETF approval as a catalyst that will attract trillions of dollars that were previously unable to access crypto assets. This influx of institutional funds is expected to significantly impact the crypto market’s growth and stability.
Since the approval of the ETFs, Bitcoin has experienced a retracement in its price, currently trading at the $42,700 level. This represents a 6% decline over the past seven days. The long-term impact of the ETFs on Bitcoin’s price and the broader crypto industry is yet to be determined.
Market observers will closely monitor the developments in the coming weeks and months to assess the ETFs’ effects on cryptocurrency adoption and value.
Source: https://www.cryptopolitan.com/imf-director-on-crypto-assets-and-currency/