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The Impact of Brexit on the United Kingdom's Crypto Sector

Queen Elizabeth II’s Bank Reveals Why it doesn’t want to Invest in Bitcoin

Reading Time: 2 minutes by on December 9, 2017 Bitcoin, Commentary, Finance, News

Like the rest of us, by now you have probably got used to seeing bitcoin hitting one high after another. Just earlier this week, the most popular cryptocurrency in the world smashed through $14,000 in less than 24 hours after registering a record high of $12,000. BTC-USD went on to post a record high above $16,000 on December 7.

The volatile nature of bitcoin makes it the focal point of a raging debate that has two diametrically opposite views.

At one end, you have cryptocurrency proponents and investors who think bitcoin’s dollar-valuation could go beyond $100,000 in the next 10 or so years, while on the other you have cynics like Goldman Sachs CEO Lloyd Blankfein who say it’s only a matter of time before the so-called “bitcoin bubble” bursts. And now it looks like another weighty authority from the UK has joined the ranks of cynics dismissing bitcoin’s future; Coutts, who count none other than the Queen of England as a client.

It looks like Coutts is not convinced by the unprecedented growth of bitcoin, at least, that’s what the bank’s public posture indicate. An investment strategist representing the bank has called the growth bubble speculative.

“Our view at Coutts is that, as an investment asset, electronic currencies like Bitcoin have nothing but sentiment backing them up,” Lilian Chovin, the investment strategist in question, remarked when asked about Coutts’ stand on virtual currencies.

She said that all digital currencies suffer from the same inherent shortcoming in the sense that their growth is not supported by any underlying fundamentals. According to Chovin, this is one key attribute that makes bitcoin unsuitable for investments.

Chovin underlined the fact that cryptocurrencies are always vulnerable to government sanctions. (She’s clearly not exaggerating; the possibility of sanctions by world governments already discourages many potential investors who are not entirely convinced by the merit of virtual currencies.)  

According to Chovin, this is another reason why Coutts’ investment roadmap doesn’t include bitcoin, or for that matter any virtual currency. Coutt’s skepticism seems to be driven by the fact that the wider technology, in general, could be undergoing a bubble-like growth.

“Technology has been a significant outperformer this year in the US. It has risen by around 35 percent in US dollar terms which is almost double the return from US equities,” Ms Chovin said.

Chovin, however, acknowledged that certain disciplines of the wider technology sector appear to be genuinely promising. These include; driverless vehicles, Artificial Intelligence, and even blockchain technology that powers cryptocurrencies.

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