The reflection of bitcoins on a computer hard drive.
Thomas Trutschel | Photothek through Getty Images
As Bitcoin continues on its upward path in 2021, one analyst says regulatory concerns around cryptocurrency are unlikely to derail its momentum.
“Regulatory issues have been around for a long time, we’ve been dispelling them for a long time. At this point, we believe that: Bitcoin is not a question of whether, but of when,” said Meltem Demirors, director of strategy at Digital asset investment company CoinShares said Monday.
“We certainly believe, you know, the best time to invest in bitcoin was yesterday; the second best time to allocate it is today,” he told CNBC’s “Squawk Box Asia.”
His comments came after Bitcoin recently knocked down another milestone, surpassing $ 1 trillion in market value last week, according to Coindesk.
If it’s a currency, it’s a horrible currency … Unfortunately, bitcoin seems to be a speculative game.
Aswath damodaran
professor at the Stern School of Business at New York University
Bitcoin has been in tears since the beginning of 2021 and has risen more than 90% so far this year, according to data from Coin Metrics. These strong gains have been attributed in part to the increase in bitcoin adoption by large investors and companies, including Elon Musk’s Tesla and the Bank of New York Mellon.
“It is becoming increasingly difficult for those who do not support bitcoins to continue their ten-year history that bitcoin will never be used by traditional financial institutions,” Dave Chapman, executive director of BC Group, told Capital Connection. from CNBC on Monday. “Frankly, I’m not sure how many more tests it takes to conclude that Bitcoin won’t go away.”
Bitcoin last sat at $ 55,867.95 per currency as of 3:45 a.m. ET Monday.
Still, Demirors warned that investors should not allocate “significant parts of their balance sheet” to Bitcoin.
“Our research has found that in a traditional portfolio of 60 to 40, a 4% allocation to Bitcoin balances the reward and risk of dispositions,” he said. The 60% and 40% bond portfolio is traditionally a popular allocation strategy designed to generate a steady income, while protecting itself from volatility.
Bitcoin a “failed currency”?
Aswath Damodaran, of New York University, was much more skeptical about investing in bitcoins.
“This is a show … amazing to watch. But it’s definitely not an investment,” Damodaran, a professor of finance at Stern School of Business at New York University, said Friday.
“If it’s a currency, it’s a horrible currency …” he said, adding that bitcoin “seems to be primarily a speculative game” that has “behaved like a very risky action.”
“It’s not an asset class. It’s a failed currency, at least right now,” Damodaran said. “Let’s see if they can fix it because … I don’t think they have any incentive to do that.”
– CNBC’s Jesse Pound, Lizzy Gurdus and Sumathi Bala contributed to this report.