The digital currency, Bitcoin, has seen a stupendous five-fold rise in the last few months and has been on a tear. This makes the market sense about the bursting of a bubble which has been building for some time. The price for Bitcoin touched around US$5,000 at the beginning of September 2017, before slipping to the low level of US$2,981 few days back driven by the headwinds from China (which is closing its cryptocurrency exchanges), but it swiftly surged back to US$3,929 with the bullish momentum again picking up.
These turnarounds have given fuel to the speculation that the cryptocurrency is in a state of a bubble that can burst soon. It is yet to be understood that whether the current buying is merely at the back of selling prospects at higher prices or the rise would eventuate towards the use of Bitcoin as an alternate currency.
Chief executive of JPMorgan Chase, Jamie Dimon, has even termed Bitcoin a “fraud” and had compared the recent hype to the tulip craze of the Netherlands in the 1600s. Some have also labelled the currency as a blockchain technology with a probable potential to revolutionize economies, but still said to blow up in some time. Even Warren Buffett had earlier highlighted that the currency lacks intrinsic value, calling it to be a mirage.
In parallel to the above views, Ray Dalio, the founder of Bridgewater Associates has said that Bitcoin is not an effective storehold of wealth owing to its association with volatility (unlike gold), and is a highly speculative market.
It is also worth noting that money laundering risks hover over such digital currencies. Apparently, Bitcoin or other digital currencies do not need the holders to trade under their real name and this is said to lead to money laundering activities.
Given the aura around, it is to be seen whether the digital currency will again touch new all-time high and sustain the level, or crash as expected by majority of the experts.
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.