Two days back, South Korea’s professors, while speaking to local media, has stated that cyrptos are a “poor choice” of investments and cannot be regarded as safe-haven assets during Covid-19 pandemic.
As per The Scoop, Professor Hong Ki-hoon of Hongik University mentioned that cryptocurrency assets such as Bitcoin (BTC) should not be regarded as “safe-haven assets” and treated in the same manner as the US dollars, gold or Treasury instruments.
Hong Ki-hoon, however, did not refuse that volatility in the financial markets is encouraging investments in the cryptocurrency market.
Hong, professor in the Business Administration department of Hongik University, stated:
“To be a safe-haven, two conditions must be met. First, the volatility of the asset’s value must be low, and second, when market volatility is expected to increase, the value should rise. Therefore, cryptos do not meet with the conditions.”
The professor explains the factors that paved way for a rise in cryptocurrency volume during Covid-19 pandemic:
“The reason for the increase in the volume after the markets crashed was that the spirit of investing in higher volatility worked to compensate for the depreciated asset value.”
The document also mentioned worries about “market manipulation.” It points that the cryptocurrency landscape is not adequately governed within the nation.
They assume the market’s prevailing popularity does not mitigate worries of investors who are reluctant in purchasing cryptos. On the contrary, according to an unnamed investment professional quoted by The Scoop:
“Individual investors are often unable to manage the risks of stocks properly, but it is virtually impossible to gauge the risk factors of cryptocurrencies. You have to understand before investing fully.”
On May 27, South Korea’s Ministry of Economy and Finance stated that they are getting ready to update the country’s Income Tax rule, an initiative which could have an impact on profits generated from cryptocurrency related investments.
