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
  • My week on Twitter 🎉: 2 Mentions, 3.3K Mention Reach, 5 Likes, 6 Retweets, 7.76K Retweet Reach. See yours with… https://t.co/IZfviidt4H16 hours ago
  • Friday View: Trustees feel the heat over climate change - bankers' pensions back in black - TPR suspends trustee -… https://t.co/kUKa8QUF9w3 days ago
  • Increased regulatory oversight will be risk-based, TPR keyperson will meet schemes deemed riskier several times a y… https://t.co/wUiKPGESaU5 days ago
  • Lesley Titcomb, TPR chief executive says change is on its way, the regulator will increase oversight between valuat… https://t.co/Wu8Pv6TfqS5 days ago
  • Join us and @AonRetirementUK on the 4th of July at the luxurious Victorian Bath House featuring educational presen… https://t.co/r1abr8Qls06 days ago
  • DWP wants trustees to feel the heat over climate change https://t.co/bs25DvyWGF #ESG #climatechange https://t.co/dZEXB0g8a46 days ago
  • My week on Twitter 🎉: 3 New Followers. See yours with https://t.co/mCw3VcMQGw https://t.co/3kEHNr3xyz7 days ago
  • Friday View: Heathrow's £325 million buy-in - Auto enrolment for the gig economy - Brunel opts for ACS structure -… https://t.co/vsnML1Vzb510 days ago
  • Pimlico Plumbers- Could gig economy workers be auto enrolled? https://t.co/qgrlWxMUW8 #gigeconomy #autoenrolment… https://t.co/wnDH18iPxG10 days ago
  • RT @eVestment: Workers in the #UK are open to increasing their retirement savings and tend to place greater emphasis on workplace #pensions…11 days ago
  • The June issue of portfolio institutional is now out: Featuring our take on #carillion and lessons for trustees as… https://t.co/yC2PNgoaPr12 days ago
  • RT @PensionsSion: Aon's very own John Belgrove shares his views in this piece. Worth reading... https://t.co/VYEJWjAU3z12 days ago
  • My week on Twitter 🎉: 2 Mentions, 3.29K Mention Reach, 2 Retweets, 3.27K Retweet Reach. See yours with… https://t.co/MeoES7Ch3L14 days ago
  • Friday View: South Yorkshire hedges pension risk- Recruitment execs face prison over pension scam - Johnston Press… https://t.co/9fV8Z48WtF17 days ago
  • RT @cfjescott: A recent piece of mine on the @CMAgovUK investigation into investment consultants in @portfolio_inst #investment https://t.c…19 days ago
  • Our ESG Roundtable: Better Long-term outcomes? Available to download now https://t.co/o7T8kWSwWY https://t.co/oHs4VlRK9E21 days ago
  • Active vs Passive : In 2016 investors withdrew around $285bn from active funds and pumped almost $429bn into passiv… https://t.co/tjpxhTxW5Z21 days ago
  • RT @WhtstheDiehlio: .@AitkenRL spoke with @graniteshares CEO Will Rhind about the ongoing active vs. passive debate. Check out their though…21 days ago
  • Green is the new black. A record sum is expected to be raised under the green bond banner this year, but is it doom… https://t.co/JYP8k0ZfZk23 days ago
  • Our Cover Story! Property: Solid Returns - Low gilt yields are forcing schemes to pile into bricks and mortar. Mark… https://t.co/9nyjFp0Z4R23 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

How investor action helps cut CO2 emissions