Bitcoin, ethereum charts look “pretty scary”, says Blackrock’s top strategist
The global chief investment strategist of the world’s largest asset manager Blackrock made comments to the press on Tuesday, suggesting that cryptocurrency market looked like a bubble, but wouldn’t pose any risks to the broader financial sector.
The strategist, Richard Turnill, made his remarks at a media briefing in New York, after Blackrock released its mid-year investment outlook for 2017.
“I look at the charts, and to me that looks pretty scary,” Turnill said, as quoted by Reuters.
According to the newswire, Turnill said that it might be possible to view price movements in blockchain-based cryptocurrencies like bitcoin and ethereum as influenced by the ultra-easy monetary policies put in place by central banks after the 2007-2009 global financial crisis.
But the sharp price gains enjoyed by those assets may be a sign of excess and have led some investors to call the market a bubble.
Bitcoin, the leading digital currency, last month reached an all-time high of nearly $3000 and although the bitcoin price has fallen some 20 percent since then, it’s still up by more than 250 percent on a yearly basis.
Meanwhile bitcoin’ closest rival, ethereum, has posted quadruple-digit percentage gains this year, but has also seen significant decline since its price peaked in mid-June. Other cryptocurrencies have been in a similar position, with huge gains followed by swift retreat to lower price levels as the enthusiasm for the sector has cooled off in recent days.
But according to Turnill, blockchain-based currencies are unlikely to pose any risks to the broader financial sector, even in the event of a much steeper decline.
“There’s no evidence that if that price went to zero tomorrow that there’d be any broader financial implication over time, but to me it is example of where you’re getting some big price movements in the market,” he said, as quoted by Reuters.
Despite the recent declines, blockchain-based currencies are gaining popularity among investors, attracted by their explosive performance and the potential this technology has as a store of value, possibly rivaling gold.
Last week Fundstrat’s head of research, Tom Lee, proposed a model for establishing valuation framework for bitcoin, based on the premise that thecryptocurrency could become a substitute for gold. According to the model, the bitcoin price could reach as high as $55,000 in five years.
According to Google Finance data, as of 11:25 BST today, the bitcoin price stood at $ 2,326, up 0.52% intraday.