According to the managers of a crypto-currency hedge fund, Ether (ETH) is neither an attractive asset for investors nor a good store of value.
Steven McClurg and Leah Wald, managers of the Exponential Investments fund, said Ether is an extremely risky asset and not a safe investment, as many members of the crypto community would believe.
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BTC is like gold while ETH is like tungsten
Both compared ETH with „digital tungsten“, unlike Bitcoin (BTC), which is considered to be digital gold. In other words, there is no certainty that Ether’s purchasing power will be maintained in the future:
„Ethereum doesn’t have one of Bitcoin’s main value propositions: predictable scarcity.“
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The report notes that the monetary policies related to Ether’s issuance are not consistent, and this makes the supply of tokens vulnerable to inflation and inadequate to represent a value proposition:
„Given Ether’s inability to function properly as a store of value, it remains a highly risky speculative tool.
Ether’s traders aim to generate profit from their short-term price changes. They pursue high returns, associated with equally high risks. In their eyes there is only the vision of digital ingots. However, this view is formed without any evidence: like Ether, it is only speculation. “
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Many investment funds continue to bet on Ether
In May, PwC and Elwood Asset Management Services published a report according to which in 2019 the assets managed by the crypto-currency funds doubled compared to the previous year, reaching a value of $2 billion: 67% of the portfolio includes investments in Ether.
However, McClurg and Wald argue that „Ether is as much a bad store of value as it is a bad kryptonite for speculation.
Grayscale Investments also believes that Ether is an excellent investment: the company bought ETH for $110 million this year. Ray Sharif-Askary, Director of Investor Relations, also revealed that about 38% of Grayscale’s clients have invested in more than one cryptoactive.
„It is encouraging for investors … to diversify their wallets with other digital currencies, just as they would with any traditional asset class.