Bank of England Claims Bitcoin not big enough to Threaten Global Economy
With bitcoin managing to bypass the $11,000 milestone for the first time and as it is now trending fast towards the five-figure market, a lot of people in the world of finance are starting to sit up and take notice.
Measuring Bitcoin’s Economic Impact
For the past number of years, bitcoin and other cryptocurrencies have had to tolerate many snide comments and remarks. With the staggering success they have had this year, a lot of those detractors have changed their tune and realized that bitcoin has the potential to have a massive effect on the world economy.
However, according to a senior executive at the Bank of England, the size of bitcoin is not large enough to pose a risk to the world economy.
Sir Jon Cunliffe commented on bitcoin’s market share on BBC Radio 5 Live, stating that “This is not at a size where it’s a macroeconomic risk to the global economy, but when prices are moving like that, my view would be investors need to do their homework.”
While he does not say it directly, by telling investors to do their homework, he is implying that bitcoin could very well be a bubble and investors need to be careful about their investments in this space in case the bubble pops.
Global Hesitancy & Future Markets
No national governments have yet adopted bitcoin, and a lot of the association’s bitcoin had at the beginning of its life cycle did it no favors. Detractors continue to raise concerns regarding online crime, and money laundering means that a lot of financial institutions and banks are wary of the sector.
One of the most outspoken critics of bitcoin to date has been the CEO of JPMorgan, Jamie Dimon. He has openly said that bitcoin is a bubble and compared it to tulip-mania of the 17th century in Netherlands. He believed that it is only a matter of time before it blows up.
Despite these comments, JPMorgan announced last week that it was looking into helping their clients invest in bitcoin.
The announcement comes after the CME Group confirmed that the enterprise would be offering bitcoin futures contracts before the end of the year. This would allow JPMorgan to help their clients to bet on the bitcoin price while collecting fees for the transactions.
Following the Money
These investment banks want to make money, and if their clients go elsewhere to trade on bitcoin, then JPMorgan will do whatever they can to keep their business.
The managing director of a well-known currency broker called UFK, Dennis de Jong, talked about how bitcoin was likely to see further increases in price shortly up until it becomes a commonly used payment source.
If it ends up becoming part of more conventional exchanges and funds, he says that most likely there will be a normalization of the price.