The cryptocurrency market witnessed Bitcoin gaining modest 0.2% in early 2024 after its spectacular 157% rally last year. UBS financial experts recently dissected the underlying factors that continue to plague the flagship digital asset despite regulatory breakthroughs.

Structural Flaws Persist Despite Regulatory Milestone

The landmark SEC decision to authorize spot Bitcoin ETFs marked a watershed moment for institutional adoption. However, UBS strategists emphasize that easier access through regulated products doesn't resolve Bitcoin's core shortcomings. The digital asset still lacks substantive adoption in commercial transactions or corporate treasury operations.

Portfolio construction challenges emerge from Bitcoin's extreme price swings. Historical data reveals that even modest 10% allocations can contribute nearly half of a balanced portfolio's overall risk profile. This disproportional volatility impact raises questions about its role in wealth preservation strategies.

Environmental considerations present another hurdle. Bitcoin's proof-of-work mechanism consumes electricity comparable to medium-sized nations, with energy demands escalating alongside price appreciation. These sustainability concerns may deter ESG-conscious institutional investors despite improved regulatory clarity.