Amid scepticism CLSA’s Chris Wood expects Bitcoin to rally further

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Published: December 1, 2017 4:20:33 PM

Amid rising scepticism over the rapid surge in the value of Bitcoin over the last week, CLSA’s Chris Wood has predicted that the upswing is still intact and the cryptocurrency is expected to rally further.

Bitcoin, investors, Bloomberg newsChris Wood said he would be surprised if the cryptocurrency story did not run further. (Image: Reuters)

Amid rising scepticism over the rapid surge in the value of Bitcoin over the last week, CLSA’s Chris Wood has predicted that the upswing is still intact and the cryptocurrency is expected to rally further. In his weekly note GREED & fear, Chris Wood, managing director & equity strategist at CLSA, wrote, “ GREED and fear would be surprised if the cryptocurrency story did not run further. But the longer term story is whether governments regulate cryptocurrencies out of existence or co-opt blockchain technology for their own purposes. Meanwhile, an old-fashioned GREED & fear favours gold and gold stocks even though it is clear that money that might otherwise have gone into gold plays of late has been attracted to the crypto phenomenon.”

On Wednesday, Bitcoin had hit $11,000 mark for the first time soaring by 900 percent this year alone. Following this, renowned hedge fund manager Michael Novogratz had called a target of $40,000 on the cryptocurrency by the end of 2018, even as the regulators kept on the edge over the rapid surge in the value and the hot air building up around it. He was among the first ones to call a target of $10,000. “This to GREED & fear seems a reasonable assumption which is why the libertarian aspect of cryptocurrencies is of limited practical import in the real world if only because of its abuse by criminal elements, which then justifies government action. Just as the internet in China has been used by the mainland government to enable increased social control, the application of blockchain technology, by digitalising assets such as real estate, could accelerate the current attack on cash,” added Wood.

Historic high

According to Coindesk Bitcoin Price Index, Bitcoin topped $11,000 mark on Wednesday, recording a historic high. While investors may be adding to their positions in the cryptocurrency market, Reserve Bank of India’s Executive Director Sudarshan Sen had said earlier this year that the central bank is not comfortable with non-fiat or private cryptocurrencies such as Bitcoin. Legendary investors from India and around the world have time and again cautioned investors to stay away from it. Thomas Carper, a senior United States Senator once remarked, “Virtual currencies, perhaps most notably Bitcoin, have captured the imagination of some, struck fear among others, and confused the heck out of the rest of us.”

No fundamental value

Legendary investor Warren Buffett had said in an interview to CNBC in 2014 that bitcoin is a “mirage”, adding that investors should “stay away from it”. In the same interview, Warren Buffett said, “It’s a method of transmitting money. It’s a very effective way of transmitting money and you can do it anonymously and all that. A cheque is a way of transmitting money, too. Are cheques worth a whole lot of money just because they can transmit money?… The idea that it has some huge intrinsic value is just a joke in my view.” Reiterating his belief on Bitcoins and cryptocurrencies, Warren Buffett told Marketwatch in October this year: “You can’t value bitcoin because it’s not a value-producing asset,” adding that it is a “real bubble in that sort of thing”.

Fraud

The rapidly surging price of Bitcoin, without any underlying asset or value-base, has irked the top banker Jamie Dimon. “Bitcoin is a fraud and will blow up,” Jamie Dimon, the CEO of JPMorgan Chase, said earlier this year, adding, “The currency isn’t going to work.” He pointed out to the absence of an underlying monetary base to support its value. “You can’t have a business where people can invent a currency out of thin air and think that people who are buying it are really smart,” Jamie Dimon said.

Bubble

Renowned investor Jim Rogers, sometimes referred to as commodities guru, too has sounded a note of caution on the prospects of cryptocurrencies, preferring to stay away from them for now. “I wish I was smart enough to buy cryptocurrencies.” Jim Rogers said in a recent interview with Kitco news. Further, Jim Rogers seemed to suggest that there might be a bubble building up in the cryptocurrency space. “It looks bubblish when you see the kind of price we see in bitcoins,” Jim Rogers said, adding that he doesn’t own any of the cryptocurrencies. “I certainly don’t know which one will come out on top, or if anyone comes out on top. But, I don’t own any.”

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