Bitcoin is not a retirement plan, this investor says

With Bitcoin back in the news and indications that the cryptocurrency might take off, investors may be hoping to strike it rich by betting on the world’s most famous cryptocurrency. But you may want to shelve those retirement plans.

So says portfolio manager Brett Girard of Liberty International, who adds that while it’s okay to convert a bit of your throwaway dollars into bitcoins, no one really knows which way this thing is headed.

Bitcoin shot up over the weekend, briefly ticking above $10,000 for the first time in a couple of months as news broke that China’s President Xi Jinping had said that Beijing would be increasing its investment in blockchain technology, the distributed ledger tech that powers Bitcoin and other cryptocurrencies. (All figures in US dollars.)

The Chinese leader reportedly spoke at the Political Bureau of the Central Committee last week, saying that blockchain is an “important breakthrough” technology and that China should “seize the opportunity” to further its development. The remarks are seen in contrast to Beijing’s past stance towards cryptocurrencies, where China had banned crypto trading platforms and so-called initial coin offerings. Further reports have noted that the Chinese central bank is looking into establishing its own cryptocurrency.

The comments gave a significant boost to cryptocurrencies across the board, especially to Bitcoin, which shot up from $7,500 to $10,500 literally within hours over the weekend. The coin has backed off since and is at $9,305 as of early Tuesday.

“(Bitcoin) is not part of your retirement plan, but if you’re interested and you want to have a bit of skin in the game then go right ahead but I wouldn’t consider it a core asset…”

But the flurry of activity has some reminiscing about Bitcoin’s meteoric rise where it went from less than $1,000 in early 2017 to almost $20,000 by December of that year, capturing headlines worldwide. Are we in for another Bitcoin surge to close out 2019? Possibly, says Girard, but don’t bet the farm on it.

“It has had a bit of a challenging year [for Bitcoin],” says Girard, CFO and portfolio manager for Liberty International Investment Management, speaking to BNN Bloomberg on Monday. “President Xie, I don’t think he specifically said Bitcoin, I think he said blockchain, and Bitcoin is sort of the proxy for that.”

“Effectively, at the end of the day this is a concept stock — you buy one, you might as well buy ten because nine of them are going to go bankrupt and one of them is going to hit. From that perspective, I think that it makes sense to put a small percentage of your portfolio in Bitcoin, if you’re willing to part with that one or two per cent,” he says.

“This is not part of your retirement plan, but if you’re interested and you want to have a bit of skin in the game then go right ahead but I wouldn’t consider it a core asset,” says Girard.

Blockchain was a heralded technology when it broke onto the scene in 2017 with promises to disrupt not only the banking sector but to add efficiencies to any number of industries from supply chain management and consumer packaged goods to insurance and real estate. And while the platform has found some adoption, it’s still in its infancy.

Cryptocurrencies themselves have been a tough sell lately for governments and businesses, alike, however, as witnessed by Facebook’s attempt to establish its own cryptocurrency, Libra. A number of early backers such as Visa, Mastercard and PayPal have all recently pulled out of partnering with Facebook on Libra, while last week, Facebook CEO Mark Zuckerberg faced US lawmakers in defence of Libra.

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