Bitcoin’s price has been volatile this year, but has shown no signs of slowing down, and the reasons for this are many. One of the biggest concerns for a company like BNY Mellon is the risk this presents, since they are responsible for holding and safeguarding tens of billions of dollars worth of cryptocurrency. Joseph Evangelisti is the CEO of BNY Mellon and he discussed this issue in an interview with Bloomberg.
A recent Bloomberg news article, “Bitcoin’s Price Volatility Casts Shadow on CEO of BNY Mellon Subsidiary” noted that Bitcoin’s price volatility is a concern for the CEO of BNY Mellon subsidiary, BNY Mellon Asset Management (BAM) where the current CEO, Joe Moglia, is a former CEO of Panera Bread. When asked why he accepted a position as BAM CEO, Mr. Moglia replied, “When you’re a CEO of a public company, you worry about volatility. In my line of work, volatility is an issue. It’s not something you ignore.”
All of BNY Mellon’s trading assets, primarily in the forms of money market funds and fixed income securities, are invested in liquid instruments that are expected to provide liquidity to the marketplace. The value of these instruments is affected by the overall value of bitcoin and is not directly correlated to the value of bitcoin itself.. Read more about bitcoin volatility and let us know what you think.
Despite BNY Mellon’s entry into bitcoin (BTC), the CEO of one of the firm’s asset management divisions remains skeptical about the significant risks associated with the world’s largest cryptocurrency.
Francesca Fornasari, head of foreign exchange solutions at Insight Investment, a subsidiary of BNY Mellon, says bitcoin is not suitable for most institutional investors because of its extreme volatility, low liquidity, management issues and environmental risks.
In an interview with Bloomberg on Tuesday, Fornasari said bitcoin is harder to value than gold because of its wild price swings, making it even harder to make a potential response in an inflationary environment.
Ultimately, you have to realize that when you invest in bitcoin, there are a number of different factors and considerations that affect the value of your investment that have nothing to do with inflation or hedging inflation, she said.
According to a currency expert, the slow and expensive bitcoin transactions could be a major obstacle to its widespread adoption. We are skeptical that bitcoin can become a payment method, Fornasari said.
However, Insight Investment is bullish on altcoins, or cryptocurrencies other than bitcoin, and expects growth in these digital assets, especially those that address issues such as transaction speed and cost, energy consumption and volatility, Fornasari said.
Related: According to an analyst at Bridgewater, bitcoin needs clear regulations to be less volatile.
Insight Investment is one of the world’s largest asset managers, with approximately $1 trillion in assets under management. The company has been a subsidiary of BNY Mellon since 2009, after the US banking giant acquired it from Lloyds Banking Group.
The company’s skeptical attitude towards bitcoin stems from the fact that BNY Mellon has been actively involved in bitcoin after the bank announced in February this year that it plans to hold and transfer bitcoin and other cryptocurrencies as an asset manager. The company also claimed that the poor performance of one of its exchange traded funds was due to a lack of exposure to companies investing in bitcoin.
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