Nov 18 (Lagos) - As BITCOIN, the so called digital gold, gives up its gains for the year, it is leading to unnecessary anxiety for stock market investors. This is because analysts are expecting the fallout from the bitcoin sell off to affect the stock markets and cause major declines there as well.
Does this make sense or is it fair towards the stock market investors who have nothing to do with BITCOIN.
BITCOIN has managed to capture the imagination of millions of people world-wide, especially in third worth countries where the fiat currencies are worthless and keep depreciating almost every year. People in such Countries use BITCOIN to hold the value of their purchasing power so when their fiat currency depreciates, they don't end up losing their money.
Some would argue this exercise can be achieved with many assets although the convertibility of BITCOIN and its speed is something unparalleled. Perhaps the forex markets can match that kind of speed and agility.
Keeping that away from the discussion, does Bitcoin actually offer any serious value to investors. Many traditional value investors still consider it to be a scam. It has no underlying value. Some attribute its value to the greater fool theory where there are enough people to pay the price so it has value.
All those arguments remain in their own place.
However is it fair for stock market investors to have to track Bitcoin value and its up's and down's and have to worry about their own investments that have nothing to do with the Bitcoin?
Stock market investments are at most times done after careful study of valuations, demand for a company's products, momentum or technical analysis. These set of people are investing in companies that produce real products or services, earn profits and return those profits to investors in the form of dividends (not always).
Bitcoin traders just seem to be betting on intangible value of something that still cannot be properly explained to a neutral person. As long as you make money, buy it. But when it stops working, where do you go or can you even explain what you invested in?
There are so many coins called "Shyt coins", these are basically scams that are allowed to flourish in the unregulated crypto market. Almost on a daily basis, some new coin gets created and its makers cash out on expense of so called "crypto investors"
As stock market investors, we have to face the reality that we now have to worry about this market which is full of scams and we have to adjust ourselves according to what those guys might cause for the rest of us.
If Bitcoin was the final solution and future of currencies, then how come it is quoted in the US Dollar?
Because at the end of the day, everyone wants to mighty US Dollar, and Bitcoin is just another form of getting USD, The reserve currency of the world. There is a very valid argument that the US Dollar can be used in digital form already and we don't actually need all these cryptos.
You say that and get ready for personal attacks from them.