Digital assets: Investment analysts are starting solutions that have no problems

How do you solve a problem like Maria? Digital assets, to confuse investment analysts, have many characteristics together with the novice of the sound of music . They are exuberant, independent and are becoming increasingly popular. How should analysts "keep a moon beam in check"? [Their Hands] ", as the song puts it?

In response to demand and fear of missing something,

investment banks have started to create studies on digital assets. The coverage of cryptocurrencies, a undercut in this group, includes price data and theories on supply, demand and regulation. Customers who hope for convincing ratings are disappointed.

Until recently regulated institutes avoided analyzing unregulated digital assets and acting with them what most watchdogs disapproved. In addition, there was no electricity of corporate finance transactions to justify this.

Now JPMorgan, Morgan Stanley and the Bank of America have started to publish research results on digital assets and their business ecosystem. Also Deutsche Bank and Mediobanca in Europe.

Among other things, it is dealt with which listed companies can live from the new industry. According to Bank of America, these are worth around $ 130 billion. Much of it comes from the Coinbase cryptocurrency exchange, which went to the stock exchange in April and has already made billions of net profits. Silvergate Capital, a pure cryptobank, is also profitable.

banks have to believe that more crypto winners come. Risk capital financing exceeded $ 17 billion in the first half of 2021 and thus tripled the value of the previous year. The acquisitions within the industry amounted to a total of $ 4.2 billion in August on the way to double the total number for 2019.

A problem annoys. Blockchain has enormous potential to rationalize transactions in underlying conventional assets. But cryptocurrencies create solutions where there is no problem, as Andrea Filtri from Mediobanca puts it.

Most broker analysts spend their days evaluating future profits, no matter how far they are removed from the business of securities. Cryptos do not produce direct returns in real money. Without this basis, the evaluation of cryptos itself - and not by companies that act with it - is an exercise of dubious intellectual validity.

This is the second in a one-week Lex series via digital assets. The first, on Bitcoin in a bear market, is here .