Adding another feather to its already well-adorned hat, Bitcoin has been successful in achieving an upgraded “B” rating in the latest evaluation by Weiss Ratings agency. So that you know, Weiss is one of the most credible names when it comes to evaluation of cryptocurrencies and giving them a rating to help investors to make an informed decision. The previous rating given by the agency to the Bitcoin was “B-” and now based upon the new evaluation of parameters; the rating agency has changed Bitcoin’s rating from “B-” to “B”.
Factors of Evaluation:
There are a total number of four factors that the rating agency consider while giving a rating to the cryptocurrencies. These parameters include the adoption of cryptocurrency, the technology used by the cryptocurrency, the risk related to cryptocurrency, and the reward associated with the cryptocurrency. These four factors again combine to form two major parameters – risk/reward and technology/adoption. For the final rating, the average score of these two parameters is considered. In the case of Bitcoin, the cryptocurrency has performed extremely well on the technology/adoption and has got a commendable ranking of “A”. However, it is on the risk/reward factor that has always conspired to drag down the rating of the largest cryptocurrency by market capitalization. It is interesting to note that the recent surge in the prices of Bitcoin has considerably improved the risk/reward factor which has ultimately reflected in the upgraded rating received by the digital coin. The new rating achieved by Bitcoin on risk/reward factor is “C-”, taking the combined rating on technology/adoption and risk/reward to “B”.
Effect on Bitcoin’s Position:
The new rating achieved by Bitcoin has further strengthened its position as a top-rated cryptocurrency. Bitcoin is a market leader, not only in terms of capitalization but also in terms of the overall rating given by Weiss. That said, Weiss has not recommended buying Bitcoin despite the cryptocurrency registering a solid improvement in its overall credentials. The rating agency is cognizant of the fact that a recent increase in the valuation of Bitcoin might probably lead to a course correction that will lead to a reduction in the price of Bitcoin once again. According to the agency, it is anticipating “substantial price correction” in Bitcoin and once that happens, then the rating agency could probably come up with a buy call. The overall tone of the message from the rating agency seems to be on the conservative side but given the track record of Weiss, this recommendation is par on the course. The current bull phase in the cryptocurrency market expected to continue in the coming days also and that might help the rating agency to revise its current stance of not recommending Bitcoin for a buy.
Experts’ Opinion :
According to the opinion of cryptocurrency experts and market analysts, this upgraded rating is going to have a positive impact on the valuation of Bitcoin; however, the magnitude of the change this new rating will have on the Bitcoin’s price is anybody’s guess. Still, the news is positive and along with Bitcoin, is expected to have a good impact on the overall adoption of cryptocurrencies. On the part of the cryptocurrency industry, efforts should be on stabilizing the risk/reward factor as continuous and unabated market turbulence is affecting the valuation as well as ratings of all the cryptocurrencies in a negative manner. If cryptocurrencies have to become a mainstay among customers and in the financial markets, there has to be certain stability in their prices. This will encourage the customers as well as investors to have digital coins as a part of their routine life.