Bitcoin investment is popular with many people who see the potential value in it. However, not everyone in the finance sector is on board. Many have spoken out about it in the past. Some have since retracted those statements, but not all of them. Perhaps they just don’t see the value in the technology.
Making a Bitcoin Investment
Recently, the chairman of UBS, Axel Weber, stated that Bitcoin is “not an investment we would advise.” He was speaking at the World Economic Forum when he made his comments. He went on to say that if institutional clients wanted to make a Bitcoin investment they are “grown ups.” He meant they know what they are doing. Institutional clients are corporations, other financial institutions, etc. However he feels that retail clients need to be protected as they may not understand what they are getting into.
His reasons may not be altruistic. He believes it might look bad for the bank that let customers invest in cryptocurrency if they lose money. Unlike institutional clients, retail clients, regular bank customers, don’t have the ability to absorb a big loss on a speculative market like cryptocurrencies.
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So what he is saying is that they advise against Bitcoin investment, and retail clients, regular people, should be protected from doing so. Good thing that people don’t need banks to make a Bitcoin investment. That might actually be why he is making these comments. This mentality may be what is holding back major institutional investment in cryptocurrencies. Weber joins other old fashioned investors like Warren Buffet who remain skeptical about the value of cryptocurrencies.
While there are ways to make a Bitcoin investment through traditional financial institutions, one needn’t use them. There are numerous ways to go about it without them. It’s as simple as having some money to invest and then setting up a wallet and getting on an exchange. Of course, research needs to be done and some caution needs to be exercised.
Regulation on the Horizon
Recently, Ernst & Young, a global accounting and professional services firm, said that Initial Coin Offerings (ICOs) are at risk of being cybercrime targets. They stated that $400M has been stolen by hackers through ICOs. Those same hackers are taking $1.5M monthly from ICO proceeds. Along with that, Jay Clayton, the head of the Securities Exchange Commission, stated they have reports of investors being told they don’t worry about federal securities laws in regards to ICOs. That could lead the SEC to begin moving against those attempting to skirt federal regulations.
South Korea is already beginning to regulate cryptocurrency trading. They have made rumblings about an outright ban on it. More recently, they have determined that anonymous trading will no longer be allowed in the country. All accounts will need to have verified identities in the near future.
Government regulation of cryptocurrencies was inevitable. If it’s done in a way that protects consumers but allows the market to flourish, it may not be such a bad thing. It could protect consumers from Ponzi and illegal Pyramid schemes and. However, talk of regulation has generally had a negative impact on cryptocurrencies and has halved some people’s recent Bitcoin investment value.
The SEC has also stated that they will start taking a closer look at public companies that remold their business around blockchain technology to ensure that due diligence is done. They want to ensure that the companies are making the proper disclosures about how they will use distributed ledgers and blockchains.
Bitcoin Bubble Bursting?
Other traditional finance experts believe that Bitcoin is a bubble ready to burst. They cite the major losses that Bitcoin value has seen since December as proof. The roller coaster ride many cryptocurrency values have taken, they say, is a sign of major instability. They believe that the bubble is going to burst soon.
Meanwhile, those of us with a Bitcoin investment still have faith in it. Volatility is part of the cryptocurrency market and that is why many people are investing in it. There’s a huge lack of volatility in traditional stock markets at present which is making them somewhat less attractive. Some investors who are looking for higher risk and reward have turned to cryptocurrencies and put money into a Bitcoin investment. The high volatility can allow for major returns on investment, but they can also cause some more stress than they are prepared for. If you’re considering an investment in cryptocurrencies be aware of the risks. Be aware of the high volatility and use that to your advantage. Don’t bet the proverbial farm on it, only put in what you can do without.
Being smart and knowing what you are getting into is far better path than the “STAY AWAY” mentality of the finance sector dinosaurs. While they may have altruistic intentions, they are also looking to keep their businesses running and highly profitable. That means they may not be the best source of information in regards to cryptocurrencies.