Many are concerned regarding the future of cryptocurrencies and how it can affect other investment vehicles. And who wouldn’t be concerned considering the volatile nature of virtual currencies, not to mention experts are divided regarding the future of Bitcoin and other cryptocurrencies? Is it time to cash out and save as much money as you can from an impending bubble? Or should you buy more?
In reality, a lot of people are waiting for answers. Christopher Harvey, Wells Fargo’s head of equity strategy, has been paying close attention to what could be one of the biggest bubbles of all time. Christopher Harvey mentioned that there is a chance that a Bitcoin implosion could “spill over” into the stock market.
He mentioned that “there is a significant amount of froth in the crypto markets. We do think that if that froth comes out, it will start to spillover”.
Bitcoin has experienced wild swings recently from surges that almost hit the $20,000 value to losing one-third of its value in just one day.
Harvey expressed his concerns about what could potentially affect equities in case there really is a cryptocurrency bubble. He also mentioned that “you’re seeing it a little bit, but just not to a large degree”. He also added that this is something to watch out for in 2018.
Harvey is predicting a strong first six months for stocks in 2018. He also believes that stocks will already be up for new challenges by the time the second half of 2018 enters whether or not the cryptocurrency market implodes or not.
But Bitcoin isn’t always bad news for the stock market. In fact, founder of Birinyi Associates, Laszlo Birinyi mentioned that Bitcoin is considered a catalyst for bringing people into the stock market. He also mentioned that Bitcoin looks to be a bubble and he is also not viewing it as an investment. However, he sees Bitcoin as a trading opportunity.
According to Birinyi, “Bitcoin has woken up a lot of people”. This means that there more investors who are watching the screens. These are the same screens that are tracking not only Bitcoin but also movement in the stock market.
This means that cash that has been kept on the sidelines is now actively becoming part of the stock market. He further explained that “all of a sudden, more and more people are aware there’s a market going on, the stock market and there’s a way to make money”.
He mentioned that he wouldn’t invest in Bitcoin. However, he admitted to trading it. He said that “I made $3,000 in an hour”.
Is Bitcoin really doing the stock market a favor or will it eventually create problems in the long run? Is there really a bubble waiting to happen and people are bound to lose their money? Birinyi mentioned that stock market has been seen on the front page along with Bitcoin. In fact, during the early part of 2017, stocks were actually doing well. However, stocks weren’t getting the same level of attention as Bitcoin, especially now.
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