Bitcoin: age of reason or speculative delirium?

(London) From American financial giants to Tesla, bitcoin, which surpassed $50,000 on Monday, is attracting more and more buyers lured by its dizzying growth, despite the concerns of many regulators.

On Wall Street, where cryptocurrency enthusiasts were still marginal in 2017, during the last price peak, converts are multiplying: Black Rock, the world’s largest asset manager or BNY Mellon Bank, have said they will invest in the area.

The performance of bitcoin has something to entice New York wolves: at more than $51,000 on Thursday, the first cryptocurrency is worth five times more than a year ago, and all the bitcoins created since its launch in 2008 represent nearly $1 trillion.

For professionals in the sector, such as the head of the European cryptocurrency sales platform Bitpanda Eric Demuth, the matter is settled: bitcoin is becoming a “new digital gold”, popular with investors who wish to diversify their assets and hedge against inflation.

“Soon, we will find bitcoins in the reserves of central banks,” he asserts.

“It is an asset which is very volatile, which is very risky, but at the same time, it has been said for ten years that bitcoin is going to collapse and it is still there”, underlines researcher Matthieu Bouvard, from the Toulouse School of Economics.

According to him, “the story of bitcoin is all the same to move towards increasingly organized markets” and to see its volatility decrease, even if it remains 10 times higher than on the stock markets.

European caution

For the moment, officials of monetary institutions are wary of this virtual currency, created by anonymous people which is managed by a decentralized network. The President of the European Central Bank, Christine Lagarde, asserted in early February that bitcoin was “not a currency” and that it was a “highly speculative asset”.

For Alexandre Baradez, market analyst at IG France, there is an obvious “marketing aspect”: some companies “integrate small amounts of bitcoins into their cash flow to show that they are following technological news”, he summarizes, while recalling that the speculative fever has not yet taken hold of Europe.

“It’s always the same thing, Europe is two years behind the United States in adopting technologies,” says the boss of Bit panda, who thinks that the old continent can catch up in the next few years.

According to analysts at cryptocurrency specialist Byte Tree, Europe accounts for just 10% of bitcoins bought by funds.

“It’s mainly because of regulations that are too restrictive,” said its founder Charlie Morris, who does not expect to see European companies follow the model of Tesla: the manufacturer of electric vehicles, led by Elon Musk, the most rich in the world and a strong supporter of cryptocurrencies, has just invested 1.5 billion dollars in bitcoins.

Digital giants like Google and Apple, whose cash flow is full to bursting, invest freely in the stock market, but Tesla stands out by entering the volatile world of cryptocurrencies.