As global financial regulators and market exchanges discuss the potential for investors to trade Bitcoin in new ways, including via a futures market, investment experts continue to caution people curious about getting exposure to the meteoric rise of the crypto currency.
“To me, bitcoin has all the classic hallmarks of a bubble. It started off with some fundamental development, which is favourable, potentially revolutionising the payment system slashing the price of shipping money from around the world,” notes Dr Shane Oliver, AMP Capital’s Head of Investment Strategy and Chief Economist.
“But as the price goes higher and higher, investors are buying into it not because of the development but because it’s gone up... so it’s become very much a speculative bandwagon,” Oliver comments, in his latest video commentary.
Amid the hype, which has led to astronomical returns for speculative traders as well as true believers in the future of the underlying Blockchain technology and the role of crypto currency, banks and financial institutions are now finding new ways to get in on the action.
Exchange traded funds dedicated to crypto currencies are the are the next obvious step. A futures market for Bitcoin will enable investors to trade derivatives rather than having exposure to the asset itself… “if you can call it an asset,” Oliver comments.
No doubt there will be increasing ways to invest in crypto currencies and bitcoin in the future, Oliver remarks.
Oliver draws on the work of Nobel Economics Laureates Daniel Kahneman, Robert Shiller and Richard Thaler in his recent note
to describe the Bitcoin phenomenon in the context of asset price bubbles and crowd psychology.
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