Sun, Nov 05, 2017 - Page 15 News List

Big investors starting to take sides in bitcoin bubble debate

By Eric Lam  /  Bloomberg

Technicians inspect bitcoin mining machines at a facility operated by Bitmain Technologies Ltd in Ordos in Inner Mongolia, China, on Aug. 11.

Photo: Bloomberg

Is bitcoin a legitimate asset, or a super-bubble waiting to implode? As prices for the cryptocurrency skyrocket, investors and pundits are increasingly taking sides.

Whether you are a backer or a detractor, what is not in doubt is bitcoin’s dizzying rally this year.

The most widely used digital currency crossed the US$7,000 mark on Thursday and is up more than 650 percent this year.

It has managed to whip past the US$100 billion total value mark, despite governmental crackdowns and mainstream market skepticism.

Bitcoin was trading at US$7,218 at 9:37am in New York on Friday.

With the rhetoric for and against heating up this week amid bitcoin’s barreling gains, here is a look at where some big names in finance stand — from those who see it as the natural evolution of money, to the naysayers waiting for the asset to crash and burn.

BACKERS

The digital currency’s evangelists are led by Roger Ver, known in the industry as “Bitcoin Jesus.”

Ver remains optimistic about bitcoin’s sustainability amid attempts from governments like China to curb some of the more speculative elements of trading.

“The only way to stop [bitcoin] is to turn off the entire Internet in the entire world and keep it turned off,” he said in a September interview with Bloomberg News.

Some countries are jumping on the bitcoin bandwagon, with Argentina’s most important futures market considering offering services to investors in digital currencies, while Turkish Central Bank Governor Murat Cetinkaya said digital currencies might contribute to financial stability if designed well.

Ronnie Moas, who for the past 13 years has made more than 900 stock recommendations via his one-man show at Standpoint Research, upped his next year’s price forecast to US$11,000 from US$7,500 on Friday.

He maintained his US$50,000 target for 2027, though he said it was conservative.

DETRACTORS

Societe Generale SA deputy chief executive officer Severin Cabannes was the latest big bank official to weigh in, saying that “Bitcoin today is in my view very clearly in a bubble,” in a Bloomberg Television interview on Friday.

Speculation around bitcoin is the “very definition of a bubble,” Credit Suisse Group AG chief executive officer Tidjane Thiam told reporters in Zurich on Thursday.

“The only reason today to buy or sell bitcoin is to make money,” and such speculation “has rarely led to a happy end,” Thiam said.

Themis Trading LLC raised a red flag this week after CME Group Inc announced plans to introduce bitcoin futures, saying the world’s largest exchange owner appeared to have “caved in” to pressure from clients.

“A bitcoin future would be placing a seal of approval around a very risky, unregulated instrument that has a history of fraud and manipulation,” the firm said in a blog post.

JPMorgan Chase & Co chief executive officer Jamie Dimon remains one of Wall Street’s most strident bitcoin opponents, saying last month that people who buy the currency are “stupid” and that governments will eventually crush it.

ON THE FENCE

While CME’s decision to offer bitcoin futures by the end of the year appears to be an endorsement of the currency’s viability, chief executive officer Terry Duffy demurred when asked whether he is concerned about a potential bubble.

“I’ve seen a lot of different bubbles over the last 37 years,” he said on Bloomberg TV. “It’s not up to me to predict if it’s a bubble or not — what I’m here to do is to help people manage risk.”

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