Can you Bitcoin it in?
BITCOIN is back in the news again after hitting a new all-time high of $67,016 last week, with some claiming it is on course to smash through the $100,000 barrier.
This will trigger glee among fans of the crypto-currency, as its value has doubled since it slumped to just over $30,000 three months ago.
Others may be suffering a bad case of FOMO, short for “fear of missing out”, and will be wondering whether to invest in this risky asset at today’s dizzying level.
The latest price surge has been driven by last week’s launch of the first ever Us-listed exchange traded fund (ETF) investing in Bitcoin.
The Proshares Bitcoin Strategy ETF will allow many more investors to pour their money into crypto, notably major financial institutions which are wary of buying actual Bitcoins.
Some see this as a sign that Bitcoin is becoming respectable, others fear it could lure unsuspecting investors into losing money on this volatile asset.
Young people are particularly drawn to cryptos, and City watchdog the Financial Conduct Authority (FCA) is urgently warning of the dangers through its Investsmart campaign.
Foreign Money chief executive Holly Mackay said the under-35s have been
seduced by the prospect of making rapid gains, both on cryptos and some fast-growing US tech stocks such as Amazon,apple andtesla: “They have cut their teeth in a period of tech-fuelled growth, with huge volatility and a crazy side-serving of Bitcoin.”
She said the financial services industry now has “a hell of a job to do encouraging new investors to diversify into more traditional, boring investments as well”.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said the FCA is worried that volatile cryptos “could blow up in the face of the financial sector” as more people and institutions pile in.
It remains a “Wild West” for investors, and the unwary should approach with extreme caution. She said: “Only dabble with money you can afford to lose.”
Uk-based investors will not be able to buy the new Proshares ETF, as it is only available to US residents.
Streeter said that is probably for the best because it invests in Bitcoin futures – contracts speculating on the future price of Bitcoin – rather than the crypto itself. That will make it even more volatile.
The ETF started off with a bang, attracting almost $1billion of trades on the first day and Fundstrat partner Tom Lee claimed it could drive the Bitcoin price to $168,000.
Antony Portno, founder of Traders of Crypto, said Bitcoin will remain volatile and investors should buy when the price is low, rather than high.
“If Bitcoin crashed back to $50,000, it would be no surprise. It might then bounce back to hit a new all-time high,” he said.
Most existing investors are simply holding on to their coins, hoping their value will climb and climb as demand grows from big institutions. The subsequent shortage of supply is helping to drive the price even higher.
Many people still cannot get their heads round Bitcoin or understand what it is supposed to do.
Some investors do not care.they are simply crossing their fingers and hoping it will make them rich, but as ever, there are no guarantees you will coin it in.