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Central Markets by Robert Lloyd, CFA

The information contained herein has been obtained from sources believed to be reliable, but the accuracy of the  information cannot be guaranteed. All opinions and outlooks are subject to change.

  • Writer's pictureRobert Lloyd, CFA

The Bitcoin Bubble

There are 2 schools of thought regarding Bitcoin:

1) It is a speculative bubble and will eventually collapse

2) It is an alternative currency and a way to preserve value

Now that it is down ~50% from the highs last month, which camp are you in?

My own view is that bitcoin is a speculative bubble like the Dutch tulipmania of 1634: 1) bitcoin has no intrinsic value and trades on sentiment alone, 2) its volatility makes unsuitable as a currency replacement, and 3) is currently not accepted at major asset custodians.

Last week, one analyst mentioned that the total value of crypto-currency ($1.5-2.0 trillion) was comparable to the size of Japan's currency market. So if a currency of this magnitude pops, then drops, are there any systemic ramifications? There is a lot of money tied up in crypto WITHOUT the benefit of a central bank backstop. This may be precisely why we have the exhilarating highs and gut-wrenching falls in the crypto asset world.

Robert Lloyds, CFA®

Chief Investment Officer

Lloyds Intrepid Wealth Management

Lloyds Intrepid LLC is doing business as Lloyds Intrepid Wealth Management. Lloyds Intrepid LLC offers investment advisory services in the State of Texas where registered and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. Lloyds Intrepid LLC and its advisers do not provide legal, tax or accounting advice. Lloyds Intrepid LLC formulates retirement plans, investment strategies, portfolio construction and investment due diligence for clients with signed investment advisory agreements with us. The information contained herein has been obtained from sources believed to be reliable, but the accuracy of the information cannot be guaranteed. All opinions and outlooks are subject to change.

© 2021 Lloyds Intrepid LLC

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