Bloomberg reports brisk trading in North America’s first publicly traded bitcoin exchange traded fund (ETF). Around $165m (£117m) worth of securities changed hands on 18 February, the first day of trading for Purpose Bitcoin ETF (BTCC). It came as the price of the flagship digital currency hit a record $58,092, as a growing number of corporate treasurers and institutional investors have given explicit or implicit support, perhaps most significantly, JPMorgan Chase & Co, given the investment house’s previous reluctance to provide either.
Doubtless some investors – those who approach the stock market as they might a day out at Kempton Park Racecourse – might feel aggrieved that they have missed out on the opportunity of a lifetime. Yet at the risk of mixing metaphors, they may well have dodged a bullet instead.
Only time will tell, but I have always felt that the rise of bitcoin is mainly symptomatic of US dollar debasement, and has all the hallmarks of an asset bubble. Its adherents suggest that it affords an effective hedge if inflationary pressures continue to crank up. They would also cite its growing acceptance by certain institutions and high-profile individuals. Yet, even if it acts as an effective store of value (a highly contentious claim), the volatility that we have witnessed over the past year – and at many points since its inception – renders the digital currency virtually unworkable as a practical means of exchange.