Advertisement

Chris Iggo: bitcoin is no currency

Bitcoin may be a phenomenal speculative punt, reckons Axa Investment Management's Chris Iggo. But a functioning currency it is not.

"Anyone following the price movements of bitcoin can't have been anything other than amazed at its recent performance," says Chris Iggo, chief investment officer of Axa Investment Management. However, it's hard to see the digital asset as a currency, he reckons. Money should act as "a store of value and a means of exchange" and it's "hard to see that bitcoin satisfies those criteria".

Advertisement - Article continues below

Indeed, "it is fair to conclude that with a market capitalisation bigger than some household-name corporations, we are witnessing a digital bubble". While "robots may be coming to take our jobs", Iggo thinks that "bitcoin might take people's wealth first".

Still, if bitcoin is indeed a bubble, it may not be the only one. "The Dow Jones jumped 4.8% in the last three days of trading in November, rising above 24,000 (with a celebratory tweet from the president) and marking a price gain of 23% so far in 2017." This is "one heck of a bull". If you also consider the "extremely low levels of volatility", it's clear "stock investors have rarely had it so good". Perhaps "President Tweet can keep the market going up" but "a bout of profit taking would not be a big surprise".

Yet despite excessive valuations, the economy remains "strong, strong, strong". Purchasing managers' index (PMI) surveys of activity from around the world for November showed that manufacturing business is solid pretty much everywhere, "buoyed by reasonable final demand and a strong technology cycle". So those who are tempted to bet against the market should note that "there is a good relationship normally between global PMIs, the economic cycle, corporate earnings expectations and stock prices" so "markets might not turn until the economy does".

Advertisement
Advertisement

Recommended

Visit/currencies/600640/the-currencies-to-bet-on-this-year
Currencies

The currencies to bet on this year

The US dollar could be set to weaken this year, while the euro, Canadian dollar and the Swiss franc could be good bets for optimistic traders.
17 Jan 2020
Visit/515579/bitcoin-has-just-crashed-hard-where-will-it-go-next
Currencies

Bitcoin has just crashed hard – where will it go next?

The bitcoin price has taken a beating, down by 15% in one day. Dominic Frisby looks at what’s behind the crash, and where the cryptocurrency might go …
25 Sep 2019
Visit/510743/another-bubble-in-bitcoin
Spread betting

Another bubble in bitcoin for traders to short

This surge in the bitcoin price seems no more likely to endure than the last one, says Matthew Partridge.
16 Jul 2019
Visit/510053/bitcoin-bear-market-but-dont-sell-now
Currencies

Bitcoin is back in a bear market – but don’t sell now

After its recent spectacular rise, bitcoin suffered a whopping great selloff that, technically, put it back in a bear market. But that doesn’t mean yo…
3 Jul 2019

Most Popular

Visit/investments/commodities/gold/601444/these-seven-charts-show-exactly-why-you-must-own-gold-today
Gold

These seven charts show exactly why you must own gold today

Covid-19 is accelerating many trends that were already in existence. The rising gold price is one such trend. These seven charts, says Dominic Frisby,…
3 Jun 2020
Visit/investments/stockmarkets/601460/disease-rioting-and-mass-unemployment-so-why-are-markets-soaring
Stockmarkets

Disease, rioting and mass unemployment – so why are markets soaring?

Despite some pretty strong headwinds in the last year, America’s S&P 500 stock index is close to all-time highs. John Stepek explains why markets seem…
4 Jun 2020
Visit/economy/eu-economy/601463/why-a-stronger-euro-is-good-news-for-investors
EU Economy

Why a stronger euro is good news for investors

The fragile state of the eurozone has for a long time brought the threat of deflation. But the ECB’s latest moves have dampened those fears. John Step…
5 Jun 2020