We use cookies to support features like login and allow trusted media partners to analyse aggregated site usage.
To dismiss this message and allow cookies to be used, please click "Continue".

Continue

Features

Twitter board

Follow us
  • Friday View: Piecing together the pooling puzzle- DGF Roundtable - Royal Mail names pensions boss -LGPS Central sel… https://t.co/DPfZ3WUv6K2 days ago
  • portfolio institutional is launching a new series on LGPS pooling, tracking changes to investment strategies and up… https://t.co/Ld04PZ2TNK4 days ago
  • Friday View: ESG: What lies beneath? - Industry backs DWP's ESG push - LGPS Central CEO to step down - Railpen hire… https://t.co/S3knBieob09 days ago
  • Out now- The portfolio institutional September issue feat our cover on ESG: What lies beneath? -Interview: Railpe… https://t.co/x9EYxDVXEl13 days ago
  • Friday View: LGPS pool appoints CIO - Jack Dromey on cost reporting - TPR hires former FCA director - NEST issues p… https://t.co/aNVGQqK35Z16 days ago
  • RT @AonRetirementUK: How prepared is your portfolio? Read a write-up of the discussions at our recent event with @portfolio_inst, along wit…18 days ago
  • "Shadow pensions minister Jack Dromey comments on the need to set compulsory standards for cost reporting." Read m… https://t.co/vH1gGZBm1q18 days ago
  • "Border to Coast, a recently launched £46bn public sector pension pool, has appointed Daniel Booth as its chief inv… https://t.co/AlIwikhgli19 days ago
  • Friday View: Spike in shareholder rebellions - Investors ditch GBP funds - Access launches first  pooled fund - GAM… https://t.co/aFzvBWgsmp23 days ago
  • Join us and HarbourVest Partners for breakfast to discover how access to private companies can provide diversificat… https://t.co/JaRlWiziJl23 days ago
  • "Ian Scott tells Mark Dunne about being back on the buy side, hedge funds, self-sufficiency, the trouble with infra… https://t.co/G0UUF9ldSx24 days ago
  • "Aon has developed an ESG rating system for buy-rated investment strategies which is designed to assess whether and… https://t.co/mstoAc3vr325 days ago
  • "With hedge fund performance improving and pension scheme investment increasing, has more institutional backing res… https://t.co/JVcIEXXKwr30 days ago
  • "The infrastructure repair bill is huge and more and more pension funds are willing to step in and plug the funding… https://t.co/zXy2lbpj6K31 days ago
  • "For investors looking to own sustainable businesses, engagement is the new divestment." Read more here:… https://t.co/YiA28qc6BI32 days ago
  • "Thanks to climate change, pension scheme portfolios are in danger of overheating. So what are trustees doing to pr… https://t.co/8gND4lC1OZ33 days ago
  • RT @eVestment: With research claiming that companies with high #ESG standards make better #investments, are sustainable strategies on the v…37 days ago
  • "The revolution in how investors are assessing companies is gaining momentum. No longer considered niche, responsib… https://t.co/uFCHnMlOux37 days ago
  • Friday View: Beyond bonds: The future of LDI - Responsible investing: Just reward - Just buys DB adviser - Ex Railp… https://t.co/1suOFFSprA37 days ago
  • "An increasing number of pension schemes are adopting a more efficient way of investing." Read more in our in-dept… https://t.co/F6Y0e9DB5E37 days ago

Strategy

Fool’s gold

Fool’s gold

Lynn Strongin Dodds
Friday 2nd March 2018

Bitcoin: An investor’s new friend or a threat to financial stability? Lynn Strongin Dodds takes a look.

Last year, crypto-currencies were all the rage but February’s sharp stock market selloff showed that it was not the safe haven many proponents had hoped for. Instead of taking cover, bitcoin investors fled and prices plummeted, reinforcing their speculative nature.

As a result, more mainstream institutions are likely to remain on the sidelines. Prices had been gyrating before turbulence hit the equity markets and overall they lost around 60% to 70% of their value in the first five weeks of 2018.  Prices slid to $6,268 from a nadir of $19,666 in mid-December 2017, according to Reuters’ data tracking pricing on the Bitstamp exchange.

Although bitcoin grabs most of the headlines, there are roughly 100 crypto-currencies listed on exchanges with ripple and ethereum among the most popular.

According to Levi Meade of Columbus Capital, they may be lumped together but they are different and are not necessarily in direct competition with one another.  For example, bitcoin cash was created on the basis of becoming a global currency, with it only more recently seeming to be a potential safe haven asset or store of wealth, while ethereum is often referred to as a smart contract.

Agustín Carstens, the new head of the Bank for International Settlement, in a speech given at Goethe University described bitcoin as “a combination of a bubble, a Ponzi scheme and an environmental disaster”. He called for central banks to clamp down on bitcoin and stop such crypto-currencies “piggybacking” on mainstream institutions and becoming a “threat to financial stability”.

Carstens added: “that to date, many judge that, given crypto-currencies’ small size and limited interconnectedness, concerns about them do not rise to a systemic level.”

However, he continued to say: “if authorities do not act pre-emptively, crypto-currencies could become more interconnected with the main financial system and become a threat to financial stability.”

Further fuel was added to the firestorm by JPMorgan boss Jamie Dimon who recently labelled bitcoin a fraud, and said its astronomic rise in value is a text-book financial bubble comparable to the Dutch “tulip mania” of the 17th century, which saw  speculators push up the price of one bulb to ten times the annual salary of a skilled worker – before quickly losing almost all of that value.

Page: 1 2 3 4
0

Leave your comment

View our comments policy

Please login or register with us to leave a comment. It's completely free!

Friday View

Friday View

Shareholder engagement: