It’s not an asset in the traditional sense of the word, and it’s not a globally-recognised currency either, but bitcoin is now worth over $108,000, which is close to a record high.
A Melbourne man, who wants to go by the name “Mick”, bought $900 worth of bitcoin in 2017.
“So if you were one of those that did buy and you’ve forgotten about your accounts — because I believe the last stat that I heard is that 40 per cent of bitcoin is lost forever — I have no doubt there will be people trying to scale that bitcoin up at this very moment in time because it’d be worth quite a substantial amount of money.”
Indeed, if you had held onto that 2017 bitcoin position you would now have exposure to close to $100,000 worth of the cryptocurrency.
And Mick says, in his experience, exiting your bitcoin position is not difficult.
“Let’s just say you had 1 bitcoin which is currently valued at around $108,000, depending on what people are buying at, it’ll liquidate down until it clears that order, and then other orders will subsequently come up, so it is actually straight forward and very easy.
“It’s literally done in seconds,” he said.
Jerome also owns bitcoin and enjoys the investment community that comes with it.
“Yeah [I bought] $5,000 [worth].”
In two and a half years, Jerome’s bitcoin holding is now worth $20,000.
“Yep, it’s not bad but I do not trade it.”
Exchange-traded funds
Last year the US Securities and Exchange Commission approved the first US-listed exchange-traded funds (ETFs) to track bitcoin.
ETFs allow investors to buy shares on units in a larger fund to get exposure to an asset.
In a similar move overnight, Britain’s financial watchdog approved the launch of crypto-backed exchange-traded notes for professional investors, but not retail, or mum and dad, investors.
Repeating warnings from recent years, however, the Financial Conduct Authority said crypto was “high risk and largely unregulated”, and that investors could “lose all their money”.
Bitcoin trader Mick says the move helps legitimise cryptocurrencies within mainstream finance.
“Ah yes, but it’s not 100 per cent there yet.
“There’s still a little bit of detail within the ETF so.
“I don’t want to comment on it because I’m not a legal professional but within the community as such it’s not 100 per cent there, but it’s almost there is what we look towards when we’re talking about it.
“It has given it more legitimacy though,” Mick said.
Extraordinary rise
The recent rise in the price of bitcoin has been extraordinary.
In January it was trading around $63,000, but it’s since risen to over $108,000, which is a gain of over 70 per cent.
Critics, like AMP’s head of investment strategy Shane Oliver, say cryptocurrencies are high risk and remain largely unregulated, and so are more open to money laundering and other illegal activity.
However, he concedes his clients do want to know why AMP isn’t invested in crypto.
“It’s a reasonable question.
“It seems views in this space range from evangelist to atheist but they say, ‘Well ok, if our clients want it, you know, we’ll give it to them.’
“For that reason, I have to be across it.
“It’s something I’m not going to dismiss completely out of hand because I know there are people there that want something to speculate on.
“And there’s also a group of people who want an asset which is seen as a reserve currency or an alternative to paper currency like gold is.
“But by the same token I’m also conscious that it’s an asset that’s impossible to value and you have to go in with your eyes open,” Dr Oliver said.
Crypto investor Mick is confident bitcoin is going to be around for a while yet.
“I don’t think bitcoin is going anywhere in the next 10 to 15 years.
“It’s been around long enough that I think it’s established itself.
“I’ve been around since 2017 so I think I’ve heard bitcoin’s going to disappear I think over 200 times since 2017 and it’s still here.
“So with the adoption of mainstream ETFs and more retail investors getting involved, I think it’s got a long-term future. But how long is anyone’s guess I suppose,” Mick told PM.
The London Stock Exchange said in a separate statement that it would accept applications for the admission of bitcoin and ether ETNs from the second quarter of this year.