In an era where arguably even normally dependable gilts have shifted from being ‘risk-free returns’ to ‘return-free risks’, have cryptocurrencies such as Bitcoin finally become viable assets? Or has recent market turbulence, coupled with regulatory intervention, put a stop to treasury interest in this space? We explore the options – and take a pragmatic view.
Cash is king. Cash is dead. They can’t both be right. The ‘cash dead’ school of thought is often based on the belief that a digital asset, most commonly Bitcoin, is the best alternative. The investment potential of Bitcoin is well known and often characterised as a rollercoaster ride. In recent months it has certainly attracted attention, not all good.
Up to the end of April 2021, Bitcoin received investment flows of $3.7bn, according to CoinShares. Its appeal appeared to be widening. With huge allocations by high-profile firms such as MicroStrategy, Tesla and Square, which together have bought $3.9bn worth, Bitcoin seemed to be coming of age in early 2021 – even if its most notable proponents were cash-rich tech firms with visionary founders holding relatively high percentages of board control.