Crypto Rally Raises Question Over Its Role in Investor Portfolios

Analysts Divided on Whether the Rebound Signals Sustained Recovery for the Asset

- Timothy Goh

Cryptocurrencies like Bitcoin and Ether have rallied in recent weeks, buoyed by clearer regulations in the US and renewed investor interest, prompting the question of whether digital assets now have a place in mainstream investment portfolios.

Bitcoin, the world's largest cryptocurrency, was trading at more than US$119,000 on July 28, after briefly crossing the US$120,000 mark for the first time on July 14. It has risen more than 80 percent in the past 12 months, driven by new Bitcoin exchange-traded funds (ETF) and rising institutional adoption, among other factors.

Ether was changing hands around US$3,800, up more than 60 percent in the past month following inflows into newly launched US-listed spot Ether ETFs. It is up nearly 20 percent from the previous year.

The price surge coincides with the passing of the Genius Act in the United States, which sets out clearer rules for US dollar-pegged cryptocurrencies known as stablecoins.

While the new law does not apply to other digital assets such as Bitcoin and Ether, it is still seen as a win for the sector, with supporters welcoming it as a step towards legitimizing an industry long associated with speculation and regulatory ambiguity.

Crypto's rebound has raised questions over the role of digital assets in investor portfolios. While clearer regulations in the US and renewed interest have fueled gains, analysts here are divided on whether the rebound signals a sustained recovery for crypto.

Mr. Timothy Liew, head of investments at OCBC Bank, said the regulatory developments in the US are a welcome step and will be viewed positively by investors and market watchers. However, he cautioned that it is still "early days" and that volatility in the cryptocurrency market is likely to persist.