Bubbly bitcoin not worth the wager - investors

[rooster59]

Bubbly bitcoin not worth the wager - investors

By Jemima Kelly

 

Bitcoin (virtual currency) coins placed on Dollar banknotes are seen in this illustration picture, November 6, 2017. REUTERS/Dado Ruvic/Illustration

 

LONDON (Reuters) - Bitcoin may have surged a staggering 700 percent since the start of the year but most investors at a Reuters Summit this week said they had not been tempted to play the volatile cryptocurrency.

 

The difficulty of assigning a fair value to a speculative instrument that is less than a decade old and lacks the fundamentals that drive other asset classes was the main reason for steering clear of bitcoin, investors speaking at the Reuters Global Investment 2018 Outlook Summit said.

 

Others said the cryptocurrency's use for criminal purposes such as money laundering was another reason to stay away, as was the widespread perception that the bitcoin rally was another bubble destined to burst.

 

"Can you live without bitcoins? Yes. Could you live without tulips in the Netherlands? Yes," Sankaran Naren, CIO of ICICI Prudential Asset Management Company, said at the Reuters Summit in Mumbai, referring to the tulip mania bubble in the Netherlands in the 17th century.

 

While a single bitcoin is worth nearly $8,000 <BTC=BTSP>, Japan Post Bank <7182.T> Chief Investment Officer Katsunori Sago said he believed its fair value was about $100 and it would have to fall to that level before the bank would consider buying it. [nB9N1E70AQ]

 

The idea that the bitcoin market, which is now worth $130 billion, constituted a bubble was the broad consensus among participants at the investment summit, which took place in London, Mumbai, New York, Singapore and Tokyo.

 

BITCOIN FUTURES

 

Bitcoin was created in 2008 as a Web-based cryptocurrency to move money around quickly and anonymously but the market is not yet regulated by any mainstream financial institution.

 

While scores of digital currency hedge funds have been launched this year, institutional investors worry that bitcoin is too lightly regulated, too volatile and too illiquid to risk investing other people's money in. [nL8N1MD5JR]

 

The difficulty in having an idea what bitcoin's value should be also means that institutional investors are not just staying away from buying the currency, but also staying away from selling, or "shorting", it.

 

"Bubbles can go on for much longer, and get much bigger, than anybody ever predicted before they start, and therefore when you're shorting something you need to be very very careful," Peter Fitzgerald, head of multi-assets at Aviva Investors, told the Reuters Summit in London.

 

Even the imminent launch of bitcoin futures by the world's biggest derivatives exchange operator, CME Group Inc <CME.O>, would not be enough to entice most mainstream investors. But it would draw in some.

 

Major British hedge fund firm Man Group <EMG.L> said it would add cryptocurrencies to its investment universe if the CME bitcoin future is launched in December, as planned.

 

CME Group said last month it would launch a futures contract for bitcoin later this year in response to increasing interest from clients. [nL4N1N65PG]

 

BLOCKCHAIN INTEREST

 

Laurence Fink, CEO and founder of the world's biggest asset manager, BlackRock Inc. <BLK.N>, said he wondered why bitcoin got so much media attention, particularly given its use in money laundering.

 

    "I don't think about bitcoin; it's just not even on my mind," Fink told the Reuters Summit, though he allowed that while it's a tiny product, "it's fun to watch". [nL1N1NJ18N]

 

    Still, many investors at the summit said while they were shunning bitcoin and the hundreds of other cryptocurrencies launched in recent years, they were interested in investing in the technology known as blockchain that underpins them.

 

BlackRock's Fink said blockchain did have a legitimate future, even if its widespread use was some way off.

 

Blockchain works as a tamper-proof shared database network that updates itself in real-time, automatically processing and settling transactions using computer algorithms with no need for third-party verification.

 

Banks and other financial firms are investing heavily in the technology, believing it could reduce costs and make their operations faster and more efficient. [nL8N1NM380]

 

"I travel a lot and I meet a lot of clients. Very rarely do I get asked about bitcoin - I don't know where that excitement exactly resides," Joachim Fels, global economic advisor and a managing director at Pacific Investment Management Co (Pimco), which has about $1.69 trillion in assets under management, told the summit in New York.

 

"But we spend a lot of time internally to look at what's behind this, to look at the ... implications of blockchain for the way how transactions are recorded and what it means in terms of potential for disruption in the financial sector," he said.

 

Many summit participants said interest in cryptocurrencies in the mainstream investment universe was limited to high-net worth individuals and companies managing portfolios for individual wealthy families.

 

But Mike Novogratz, former star macro hedge fund manager at Fortree Investment Group and now CEO of Galaxy Investment Partners, said institutional investors were only about six to eight months away from adopting bitcoin. [nL1N1NJ215]

 

"The institutionalisation of this space is coming. It's coming pretty quick," he said at the summit in New York.

 

 

-- © Copyright Reuters 2017-11-18

[connda]

Now that the CME is in the game, paper derivatives will control the price of Bitcoin.  However, unlike gold and silver, the sheer number of cryptocurrencies will belay derivatives traders from controlling the cryptocurrency market unless the government itself puts its stamp of approval on one or a set of them - then it can be controlled.....maybe.  Otherwise, money will simply move to the non-derivative cryptocurrencies. Too many smart people have gotten burnt in the last two decades. This is far from a slam dunk for those who wish to control cryptocurrencies. But, expect it to at least momentarily put the dampers on which in the long run may not be a bad thing.

[speedtripler]

1 minute ago, connda said:

Now that the CME is in the game, paper derivatives will control the price of Bitcoin.  However, unlike gold and silver, the sheer number of cryptocurrencies will belay derivatives traders from controlling the cryptocurrency market unless the government itself puts its stamp of approval on one or a set of them - then it can be controlled.....maybe.  Otherwise, money will simply move to the non-derivative cryptocurrencies. Too many smart people have gotten burnt in the last two decades. This is far from a slam dunk for those who wish to control cryptocurrencies. But, expect it to at least momentarily put the dampers on.

Cme and the hedge funds are only going to focus on bitcoin, they are not going to invest in the other 1300  "alt coins" which have small market caps and are not worth bothering about for institutions... 

 

Everyone should hold a small amount of bitcoin if you can afford to, the upside is a lot greater  than the downside over the next few years... 

 

https://www.cnbc.com/2017/11/13/novogratz-says-institutional-investors-will-soon-adopt-bitcoin.html

[ghworker2010]

17 hours ago, speedtripler said:

Cme and the hedge funds are only going to focus on bitcoin, they are not going to invest in the other 1300  "alt coins" which have small market caps and are not worth bothering about for institutions... 

 

Everyone should hold a small amount of bitcoin if you can afford to, the upside is a lot greater  than the downside over the next few years... 

 

https://www.cnbc.com/2017/11/13/novogratz-says-institutional-investors-will-soon-adopt-bitcoin.html

I agree with your comment and disagree with conda above. 

 

I think there's going to be huge upside in Dec and Jan when Wall street money starts to play with bitcoin. 

 

This is currently an opportunity in a lifetime to make big returns. I believe in 3 to 5 yrs this will all stabilize and returns will be 5%. 

 

This is the least riskiest time to invest in bitcoin. 3 yrs ago it was extremely high risk. 

[bartender100]

Been mining BC with my super fast CPU, going to be a millionaire soon, or not, but I have made a few dollars worth for nothing 

[PAIBKK]

Invest in Bitcoin and get your bitcoin for  2,000 €

http://bitcoinoffer.top 

[ghworker2010]

2 hours ago, bartender100 said:

Been mining BC with my super fast CPU, going to be a millionaire soon, or not, but I have made a few dollars worth for nothing 

better off to buy bitcoin and bitcoin cash. Leave the mining to the chinese

[Jonmarleesco]

Logic is raising its head.

[Jonmarleesco]

8 hours ago, ghworker2010 said:

I agree with your comment and disagree with conda above. 

 

I think there's going to be huge upside in Dec and Jan when Wall street money starts to play with bitcoin. 

 

This is currently an opportunity in a lifetime to make big returns. I believe in 3 to 5 yrs this will all stabilize and returns will be 5%. 

 

This is the least riskiest time to invest in bitcoin. 3 yrs ago it was extremely high risk. 

'This is currently an opportunity in a lifetime to make big returns.' So was the Nasdaq pre-2000.

[fiddlehead]

8 hours ago, bartender100 said:

Been mining BC with my super fast CPU, going to be a millionaire soon, or not, but I have made a few dollars worth for nothing 

What is your electric bill?

[Guitar God]

I'm pretty sure he's joking. CPU mining of BTC hasn't been profitable for years, neither has GPU mining. Even the best ASIC miner is going to take 1.5 years to pool mine one Bitcoin.