Cryptocurrencies Dismissed As Viable Investment

PGIM has dismissed cryptocurrencies as a viable investment within investor portfolios. In a ‘Megatrends Report,’ it compared modern cryptocurrency to the ‘wildcat’ banking era of American history, in which state financial institutions launched their own, often highly unstable, currencies before the introduction of a federal currency in 1863. While cryptocurrencies have “heroic” aims, it says pricing is based on speculative behaviour and it is an unreliable diversifier and an inadequate safe haven asset or inflation hedge. As well, the unsettled regulatory backdrop and the significant ESG (environmental, social, and governance) concerns around climate and governance pose additional headwinds for long-term investors. However, the report did see value in crypto’s underlying blockchain technology, arguing that it represents a highly secure and robust system for verifying and recording transactions.