Bitcoin is no less of a bubble by being on the futures market, Paul Donovan, the global chief economist at UBS has warned.
Bloomberg host Tom Keene asked if Bitcoin has been legitimatised now that it is on the futures market.
Mr Donovan said: “No I don’t think they do.
“The analogy I always go back to is 1636, the city of Amsterdam, introduced cash-based futures on tulip bulbs.
“It didn’t mean tulip bulbs were a good investment, as was disproved in February 1637, as no doubt you recall.”
Tulip Mania was a period in 17th century Holland where contract prices for some bulbs of the new and fashionable tulip reached extraordinarily high levels and then dramatically collapsed. It is generally considered the first recorded speculative bubble.
The economist said it does not stop Bitcoin being a bubble.
Mr Donovan added: “So I don’t think this legitimises it, this gives you a way to get exposure to it, fine but it’s a bubble.
“A bubble is a bubble no matter how you look at it.”
Currencies such as Ethereum and Bitcoin are forms of digital currencies or cryptocurrency, which are created and held electronically, and not currently subject to any form of financial regulation, sparking concerns that investors have no protection should the bubble burst.
Bitcoin itself, which started the year valued at less than £1,000, has smashed records in recent weeks, surging past the £17,500 barrier by lunchtime on Wednesday.
The price surge came after the bitcoin futures launch late on December 10 gave investors exposure to the bitcoin market via a large, regulated exchange for the first time.
Nevertheless Wall Street remains sceptical of the highly volatile digital currency, with critics warning that bitcoin could be a bubble about to burst.
Source : EXPRESS