ETH rediscovered: Cash Society Strategy
For years, Ethereum was the main player in the cryptocurrency sector. But he always had trouble persuading Wall Street. A new group of money companies may have found solutions to make more attractive ETH in the eyes of traditional investors
In short
- The biggest challenge Ethereum was that Wall Street did not understand what gave ETH.
- The director of Bitwise, Matt Hougan, says that money companies surround ETH on stocks, which is similar to active income recognized investors.
- These models are risky, but open the way to the wider acceptance of ETH in traditional finances.
Transform ETH into a “income machine”
For Matt Hougan, the director of investment at Bitwis, the main problem is not ETH technical, but narration.
If we are thinking about the challenge that ETH has been confronted in recent years from the point of view of the valuation, it is that Wall Street had no clear answer to the question of why it was worth.
Unlike Bitcoins, which represents itself as digital gold, it is more difficult to identify the design of ETH. Is it a reserve of value? Token of the return generator? Deflation asset due to its burning mechanism?
This uncertainty complicated the integration of ETH into institutional portfolios according to classic standards. According to Hougan, however, some money companies change the situation by integrating ETH into structures wrapped in the form of actions.
If you take $ 1 billion, put them in the company and put them, suddenly generate income. And investors are used to companies that generate revenue.
Ethereum cash registers are not without risk
These cash companies act as small shares. They receive funds through traditional tools such as sales of stocks or bond issuing, then buy this capital and stike ETH. This allows investors to have an Ethereum exhibition in a form that is known to them: investment in shares.
However, Hougan warns that companies that hold ETH must proceed with caution. Those who conclude debts to buy cryptocurrencies must manage interest and avoid excessive inability, especially in the volatile market. If ETH collapses and the company cannot cover its costs, it can be forced to sell their assets at the worst time.
Another risk is the risk of the basic gap (basic risk): when the company’s debts are denominated in the currency (such as the dollar), while its assets (ETH) are very volatile. This means that Hougan is afraid of brutal collapse.
I think people are wrong what a catastrophic collapse might look like. Even in an unfavorable scenario, it would be rather slow and partial disconnection.
Basic
Ethereum may have begun as a decentralized playground for developers, but its future could be much more boring: predictable cash flows, professional capital structures and investment vehicles adapted to market standards. It doesn’t have to be the most interesting story, but for Wall Street it’s exactly what matters.
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I was passionate for almost ten years since I was young and I was curious for investment for the first time. This early spark led me to years of research, writing and exploring the future of decentralized technology.
Renunciation
The words and opinions expressed in this article are involved only by their author and should not be considered investment counseling. Do your own research before any investment decision.