Bitcoin too good to miss or a bubble ready to burst

The problem with investing in bitcoin is that it naturally feels too good to be true.

The largest cryptocurrency in volume costs 600 percent more today than last year, rising from about $ 7,000 per bitcoin to $ 54,000 this week, and by the way becomes one of the most effective financial assets for 2020. The year-round rally has so far surpassed fears of a surprise repetition of the 2018 price crash.

Eye contact makes it difficult even for cryptocurrency skeptics it’s hard not to think about investing in bitcoin and many long-term skeptics are crumbling. Jamie Dimon, head of US banking giant JPMorgan, is just one of the most prominent crypto bears in recent years. Newer-born cheerleaders include Tesla manager Elon Musk and several billionaire hedge fund executives who are convinced that as digital equivalent to gold, the exchange rate for bitcoin against the common currency has increased dramatically.

So is bitcoin just a great Ponzi scheme or a real investment opportunity? Should marketing investors give in to temptation? FT Money spoke to financial professionals inside and outside the cryptomarket and found that the concept remains very different. Recent stellar performance has transformed some bears into bulls. But the ******** warning warns that the mature foam ****** is still a ball.

Even enthusiastic crypto fans are reluctant to bet the money they have saved for their lives on goods that are subject to flexible hair lifting standards. Even among these lovers, many limit their investment to 1-2 percent of their portfolio.

Despite the fact that cryptocurrencies became the digital equivalent of gold over time, today they give fraudsters a rich hunting ground.

Is it really different?

Since the beginning of January, the value of bitcoin has risen by 85 percent and in mid-April hit the latest in a series of record highs of $ 65,000. Companies working in the digital currency industry are attracting a flood of money. In the current (normal) stock market, investors have estimated Coinbase, a cryptocurrency exchange launched less than 10 years ago, at $ 72bn, places it equal to BNP Paribas, a French bank with roots dating from 1848.

Young people are on the investment board. In the UK, millennial investors and Gen Z have more opportunities to buy cryptocurrensets than stocks and more than half (51 percent) of those surveyed had sold digital currencies, research from retailer Charles Schwab shows.

After a year of rising prices, the bears are warning of a growing danger of the fall in 2018 style. Bitcoin Bulls argue that the current rally is different from the 2018 bubble burst, when the price dropped from just over $ 16,000 to just $ 3,000. Today, they say, demand is being sought from professional trading firms and institutional investors whose presence brings stability.
$ Per bitcoin line chart showing Bitcoin


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Not everyone agrees. “It is no different this time. There is no new era, other than what the promoters tell you, ”said David Rosenberg, a Canadian economist and president of Rosenberg Research. "Asset price bumps are coming, bumps are going, but none of them are fixed by the side."

Contrary to young investors, those 55 years of age or older are determined to stay on the edge with only eight percent of the study respondents in this age group selling digital money, a Charles Schwab study found.

They may be right in doing so. Investors worldwide have lost more than $ 16bn since 2012 in cryptocurrency-related scams and fraud, according to the Xangle disclosure forum. The Financial Conduct Authority, a UK financial management company, warned this year that investors could lose 100 percent of their money if they toss cryptocurrencies. It did not seek to block cryptocurrency transactions but did prohibit the sale of cryptocurrency acquisitions to UK retail customers.

Since crypto markets can be regulated, investors have no one to turn to for help if they become victims of fraud. Trade can be turned upside down and their founders disappear. A new coin can turn into fake tissue.

"There are a lot of scams and criminal activity against people and it is very important to realize that in an unregulated market there is no way to get help," said Ian Taylor, chief executive of the CryptoUK entertainment group.

Another concern for investors is the environmental impact of cryptocurrensets. The carbon emissions associated with bitcoin are equivalent to Greece.