Bitcoin’s buzzing again. I feared the worst after the shocking price dips of late April, but the cryptocurrency’s bounced back, and then some, coming within spitting distance of $6,000 for the first time since November at around midday on Tuesday.
However, Bitcoin’s not the only one thriving in post-bank-holiday business, with XRP, Litecoin and Ethereum also making solid gains. Indeed, the latter was leading the pack as of pixel time and, although paring gains from earlier in the session, was still 8% higher from Monday when I last looked.
Movin’ on up
I’ve remained cautious over the virtual currencies because steps to approve this asset class by the likes of the US Securities and Exchange Commission (SEC) — an essential requirement for Bitcoin et al to really push on, and something which the market seems to be taking as a given — has still remained elusive. Until the green light is given, the inflow of institutional investors, activity that’s also essential to establish the currencies as bona fide investment vehicles, will remain rooted to the starting blocks as well.
That said, a Bloomberg report released yesterday claimed that Fidelity Investments is a matter of weeks away from launching a crypto trading platform for institutional clients, a move that could spark a flurry of countermoves from its competitors. It’s no wonder prices of the currencies have ballooned in the past 24 hours.
Demand surge
Is Fidelity right to bet on a demand surge for these digital assets? Well, if a poll from deVere Group is anything to go by, it could be onto a winner. Research suggests that 68% of ‘high net worth’ individuals will be invested in cryptocurrencies by the close of 2022.
More than 700 people from all over the globe, individuals who can lay claim to £1m-plus (or equivalent) in investable assets, took part in the survey which deVere chief executive Nigel Green said illustrates “high net worth individuals are not prepared to miss out… and are rebalancing their investment portfolios towards these digital assets.”
Aside from the so-called fear of missing out though, Green identified five other factors behind robust investor demand for cryptocurrencies, including their borderless nature which makes them “perfectly” suited to an increasing global commerce and trade; the rise of digitalisation; and significant ‘real-life’ opportunities like helping the two billion unbanked global citizens to bank.
What to do?
Interesting data, sure, but I’d be prepared to bet that a large chunk of those would-be buyers would be waiting for regulatory approval in the US, European Union and elsewhere before taking the plunge with cryptocurrencies. And, as I said earlier, expecting these laws to be signed off in the near future is by no means a formality.
It’s why I’m much happier to pass on Bitcoin and similar assets for the time being and stick with stock investing instead. The equity market arena may not be perfect, but it’s a heck of a lot more legitimate than crypto and, consequently, a lot less prone to bouts of shocking volatility as well.
And while I believe share investors should continue to make a fortune centuries from now, I think Bitcoin may not even be around in a decade. So I suggest giving it a wide berth!