Insignificant systemic risks from speculation in cryptocurrencies: BlackRock strategist

In the last four years the price of bitcoins have jumped by 264%.

In a significant development that could lead to the widespread adoption of bitcoin technology, the global chief investment strategist for BlackRock Inc has suggested that while a loose monetary policy may have aided speculation in digital currencies, including bitcoin, the risks to the broader financial system appears to be limited.

BlackRock’s strategist Richard Tunill, stated it might be possible to view price movements in blockchain-based cryptocurrencies as influenced by the ultra-easy monetary policies put in place by central banks in the wake of the global financial crisis of 2007-2009.

A sharp rise in cryptocurrencies have led to some investors calling it a bubble.

“I look at the charts, and to me that looks pretty scary,” said Turnill at a media briefing in New York.

Turnill and his colleagues are advising clients to stay invested in global stocks, despite some strategists warning that stock prices are overextended after a run-up over the better part of the last decade.

Last month, the price of bitcoins hit a record high of nearly $3,000. However on Tuesday, the price of bitcoin fells nearly 20% and was seen trading at $2,366. However seen in the context of the last four years, the price of bitcoins have jumped by a whopping 264%.

Competing cryptocurrencies, including ethereum and litecoin, have posted a four digit gain ahead of losses in recent days.

While many investors have warmed up to the technology, thanks to its record performance and the fact that it can potentially compete with gold and government-issued money as a store of value, others value the technology behind the currency – one which automatically and transparently documents and verifies bitcoin transactions.

Turnill has suggested that the broader financial risks associated with blockchain-based currencies appears to be limited.

“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,” said Turnill.


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