I’m more than a bit worried about Bitcoin. While the digital currency’s recent price spike has attracted plenty of cheer — just yesterday it surged to levels not seen since January 2018, above $13,000 — I’m worried plenty of new entrants into the market are setting themselves up for a fall.
What goes up…
In total, Bitcoin has gained around 65% in value over the past month alone, giving all the signs of an overheated market. There are plenty of critical questions over the legitimacy of Bitcoin (and the broader cryptocurrency arena) which remain unanswered, adverse answers which could send prices of these new-age assets plunging through the floor.
Last week’s decision by the Financial Conduct Authority to ban crypto-linked products in Britain certainly suggests regulators remain less-than-enthused over the way virtual currencies are valued and handled. Since then, the European Central Bank has chimed in to highlight the problems of the asset class. When asked about whether the bank was thinking of adding them to its reserves, economist Philip R Lane commenting simply that “Bitcoin is not a currency, it rather is an asset and it is very volatile.”
Could the Securities and Exchange Commission be the next to give Bitcoin et al the thumbs down by throwing out plans for the launch of an exchange-traded fund?
A better buy
The difference between Bitcoin making or losing investors a fortune remains precariously balanced on a knife-edge. So why take the risk when there’s plenty of great FTSE 100 shares out there to help you get rich?
Take Barratt Developments (LSE: BDEV), for example. It’s a share I own and never plan to sell. Fresh trading details last week showed exactly why.
It doesn’t matter uncertainty over Brexit is hampering the broader UK housing marketas sales of the Footsie firm’s homes continue to rip higher. Barratt saw completions jump to 17,856 homes in the 12 months to June, up from 17,579, while forward sales as of last month boomed to £2.6bn, from below £2.2bn a year earlier.
Let’s make no bones about it. Government has proved itself to be quite impotent in even putting a dent in the country’s chronic homes shortage, and the current administration has proved itself no different. Even its most recent 300,000-new-homes-per-year target — one which many in the industry deem to be insufficient in tackling the crisis — seems to already be failing miserably.
This, along with the increasing competition in the mortgage market which is driving demand, is why I’m confident the likes of Barratt will remain brilliant profits generators and, consequently, big dividend payers for many years to come.
Indeed, for the fiscal year just started, City predictions of another payout hike leaves investors the opportunity to grab a monster 8.2% forward yield. So forget about Bitcoin, I say you’d be much better off investing your hard-earned money here than gambling it on Bitcoin.