Cryptocurrencies: Hot Buy or Hot Air?

With traditional stock markets offering robust gains in 2017 and looking poised to continue their attractiveness in 2018, investors need strong persuasion to shift their equity allocations elsewhere. Enter the latest media darling: cryptocurrencies. The alternatives news feeds are awash in stories extolling the meteoric rise of cryptocurrency values and the new funds forming to attract investors to this hyper space. Bitcoin, Ethereum, Litecoin, and Ripple are several of the better known, but still misunderstood, cryptocurrencies that inhabit this 'etherworld' of finance.

The gains that some of these currencies made in 2017 are staggering; their success seems too good to be true. But volatility is the evil twin of such rapid gain, and investors must employ a healthy respect for how fast these cryptocurrenies can rise and fall.

The 'bubble' is definitely alive and well in the virtual world of crypto.

IF YOU DON'T USE IT, SHOULD YOU OWN IT?

With new crypto currencies, platforms, and funds devoted to this area emerging at a dizzying rate, clearly a lot of interest and money is attracted to the space. Even the country of Venezuela is looking into launching its own national cryptocurrency. This month Reuters reported that Venezuelan President Nicolas Maduro, despite opposition and doubt within his own government, announced his intention to launch a crypto "petro" currency, backed by oil reserves to shore up the nation's collapsed economy. The move is largely seen as a desperate move in reaction to U.S.-led financial sanctions, but beyond this objective seems ill-defined operationally. Venezuela's real currency, the bolivar, is in freefall, and the beleaguered country is sorely lacking in basic needs like food and medicine.

The crypto space is largely unregulated, and poses dangers for the uninformed. Financial advisors and regulator......................

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This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.