Despite Bitcoin’s biggest ever trading day culminating in a $14,000 high, England’s Coutts bank is steering clear of the cryptocurrency.
Joining the chorus of Bitcoin naysayers like Jamie Dimon and Dennis Gartman, Coutts Bank, whose list of esteemed clients include the British royal family, are skeptical at best about the meteoric rise of the value of Bitcoin.
Speaking to The Telegraph, analyst Lilian Chovin declared the virtual currency a speculative asset that holds no tangible value.
“Its sharp rise brought back memories of the dotcom bubble back at the turn of the century.”
“Our view at Coutts is that, as an investment asset, electronic currencies like Bitcoin have nothing but sentiment backing them up.”
Chovin went on to note that the prevailing atmosphere around Bitcoin was highly skeptical, mainly because of the capital gains made by early investors.
Another concern is the inability to predict what the future holds for virtual currencies in terms of government legislation and regulations:
“They are vulnerable to government sanctions and lack the kind of data we look for to gauge value. We, therefore, have no current plans to include them in our investment strategy.”
Ironically, the analyst noted the potential applications of Blockchain technology as something the bank is paying close attention.
Staying clear of a Blockchain-based cryptocurrency, Coutts could potentially invest in other industries that find innovative ways to apply Blockchain technology, according to Chovin:
“In our view, the development of Blockchain technology, which sits behind so-called ‘cryptocurrencies’ like Bitcoin, is a far more interesting area to watch.”
“This new technology has the potential to disrupt any field where there’s the need for secure, transferable records.”
Eye on futures launch
While most banks have kept their distance from cryptocurrencies, there is no doubt that they will be watching the launch of Bitcoin futures by CBOE and CME in the next two weeks.
The trade exchanges will blaze the trail ahead of less-ambitious institutional investors - and their success and failure will be scrutinized by the rest of the financial world.