Saturday, December 4, 2021

Fixed Income Expert Warns Bitcoin Gains May Already Be Priced In

Fixed Income Expert Warns Bitcoin Gains May Already Be Priced In

As Bitcoin teases by hovering just under the $10,000 mark, many are wondering how sustainable 2017’s bull run really is. Even some supporters are expressing alarm at the rapid growth — including financial commentator and 20-year ETF/fixed income expert Peter Tchir.

Also read: Bitcoin Will Fail Without Central Authority Says Finance Professor .

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More Investment Products May Not Boost Price After All

Mainstream investment products like ETFs and futures could be boosting bitcoin’s price, Tchir wrote in Forbes this week. They bring in large investors who want to bet on BTC, but lack the knowledge and/or trust to simply buy and hold it themselves.

Peter Tchir fixed income expert
Peter Tchir

However, speculators anticipating more such products might have already “priced in” the expected rises. In other words, you could add a dozen more investment options and it won’t get BTC any closer to the moon. This could stop the price rising as fast as some wish — or worse, lead to a big “correction”.

Some claim the world’s first well-known scarce digital asset could be worth a million dollars or more — the mere existence of such a technology makes it that valuable. Critics counter that it has no value at all beyond speculative trading. So far the momentum is with the former argument, but that’s no guarantee of future profits.

“I have to admit to having some real trepidation at these levels,” Tchir said.

Fixed Income Writer Is No Bitcoin Critic

We should note Tchir is no Bitcoin critic. On the contrary, he describes himself as “converting from bullish to at best neutral”. He bases his opinions not on the technology, but on opportunities and risk factors in the fixed income investment field.

The bulls remain confident of exponential gains, but the “agnostics” have subtly become more cautious in recent weeks, he said. Launches of new mainstream investment products might become “sell the news” opportunities for holders rather than a trigger for immediate gains. Announcements would then have the opposite effect to what amateur traders expected.

Other Semi-Related Threats to Bitcoin Value

Tchir also noted two other potential threats to bitcoin’s value.

Federal Reserve Central BankCompeting assets and opportunities are sending investors elsewhere. ICOs aside, we’ve noted at Bitsonline that the massive bull runs for assets like DASH, ETH and even Ripple XRP are turning heads. The longer those technologies stick around and can sustain value of their own, the more attention they’ll draw away from bitcoin.

Tchir’s third concern was that governments and central banks will “push back” at some point. The more valuable cryptocurrencies become, and speculation grows larger and hotter, the greater the threat they represent to the existing order. China’s “bans” might be good test runs for resilience, but a truly co-ordinated effort by the world’s central banks against cryptocurrencies could be different.

Overall there are still many unknowns, and even today’s bitcoin investors are early adopters. Tchir admitted there’s still a long way to go and many unknowns remain, but concluded that he’s exercising caution by reducing his BTC holdings for now.

Do you think Tchir is right, or do you believe the bulls? Please share your own thoughts in the comments.


Images via Forbes, Pixabay

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