UBS: “Shun bitcoin” Amid Price Bubble and “Bite at Blockchain”

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According to a top wealth manager, Bitcoin is a bubble, and it should be shunned. However, it the agency says that people should be “biting at blockchain”, the technology which underpins the cryptocurrency, predicting that it to be an industry that will be worth billions in the next decade.

“We do not see Bitcoin as a viable investment and instead see opportunities in blockchain technology,” UBS concluded in an analyst note, advising that investors should steer clear of “the biggest speculative bubble in history.”

“We believe this has all the hallmarks of a bubble. High turnover, against limited real-world use, suggests that many buyers are seeking speculative gain. And while the supply of Bitcoins is limited, the broader stock of cryptocurrencies is not, with thousands of potential substitutes.

“We don’t advise clients either to invest in Bitcoin or to short it – on the principal that markets can remain irrational longer than you can remain solvent. Instead, we advise investing in the underlying blockchain technology, which we expect to generate $300bn to $400bn of global economic value by 2027.”

Mark Haefele, the Global chief investment officer at UBS Wealth Manager, added: “Predicting the peak is difficult, but all bubbles tend to end the same way – with a transfer of wealth from the many to the very fortunate few.”