The reflection of bitcoins on a computer hard drive.
Thomas Trutschel | Photo library via Getty Images
As Bitcoin continues its upward trend in 2021, one analyst says regulatory concerns about the cryptocurrency are unlikely to detract from its momentum.
“The regulatory issues have been around for a long time, we’ve long since eliminated them. At this point in time, we believe Bitcoin is not a question of if, but when,” said Meltem Demirors, chief strategy officer at CoinShares, a digital asset investment firm said on Monday.
“We certainly believe that the best time to invest in Bitcoin was yesterday – the second best time to allocate is today,” she told CNBC’s Squawk Box Asia.
Their comments came after Bitcoin recently passed another milestone, exceeding a market value of over $ 1 trillion last week, according to Coindesk.
If it’s a currency, it’s a … terribly bad currency … Bitcoin seems like a speculative game primarily.
Aswath Damodaran
Professor at the Stern School of Business at New York University
Bitcoin has been in a rift since early 2021 and is up more than 90% this year, according to Coin Metrics. These strong gains are partly due to the rampant adoption of Bitcoin by major investors and corporations, including Elon Musk’s Tesla and the Bank of New York Mellon.
Bitcoin was last traded at $ 56,355.50 per coin on Monday at 1:26 a.m. ET.
Still, Demirors warned that investors shouldn’t allocate “substantial parts of their balance sheets” to Bitcoin.
“Our research shows that in a traditional 60-40 portfolio, a 4% allocation to Bitcoin offsets the reward as well as the risk of drawdowns,” she said. The 60% equity and 40% bond portfolio has traditionally been a popular allocation strategy to achieve stable returns while protecting against volatility.
Bitcoin a “failed currency”?
Aswath Damodaran of New York University was far more skeptical about investing in Bitcoin.
“This is an … incredible show. But it is definitely not an investment,” Damodaran, professor of finance at NYU’s Stern School of Business, told CNBC’s Street Signs Asia on Friday.
“If it’s a currency, it’s a … terribly bad currency,” he said, adding that Bitcoin “appears to be primarily a speculative game” that “acted like a very risky stock”.
“It’s not an asset class. It’s a failed currency, at least until now,” said Damodaran. “Let’s see if you can fix it because … I don’t think you have any incentive to do so.”
– CNBC’s Jesse Pound, Lizzy Gurdus, and Sumathi Bala contributed to this report.
