Will cryptocurrencies rob investors out of hundreds of billions?
Cryptocurrencies may be a controversial investment, but according to coinmarketcap.com roughly $367 billion was invested in them as of March 13 and more money is likely headed into a market that includes bitcoin and ripple.
According to a survey from the consulting firm deVere Group, six out of 10 people not invested in cryptocurrencies are thinking about entering the market while seven out of 10 people already invested are considering an increase in their exposure in the next 12 months.
When respondents not invested in cryptocurrencies were asked if they would consider or are considering including at least one cryptocurrency in their investment portfolios, 62% said yes, 26% answered no and 12% said they didn’t know. The respondents lived in the U.S., the U.K., Australia, the UAE, Qatar, Switzerland, Hong Kong, Spain, France, Germany and South Africa.
Meanwhile, 71% of investors who do currently have cryptocurrencies as part of their portfolio said that they are looking to increase their exposure over the next year, 25% said that they would not and 4% said they didn’t know.
Bitcoin has attracted controversy. Some think the value of the cryptocurrency will drop to zero even if they are supportive of blockchain, the underlying ledger technology.
Steve Strongin, head of global investment research at Goldman Sachs, said in a Q&A published in a Feb. 5 research note, that he believes that most cryptocurrencies will ultimately fall to zero because current iterations are “too primitive” to be viable in the long term.
If all cryptocurrencies dropped to zero today, investors would stand to lose the roughly $367 billion invested in cryptocurrencies. But if investors continue to flock to cryptocurrencies, as the deVere survey suggests, a lot more money could be at risk.
According to the 2017 Investment Company Fact Book, total worldwide assets invested in regulated open-end funds was $40.4 trillion in 2016.
While cryptocurrencies do have many naysayers, there are also those who are neutral and even supportive. Opinions are divided – even at Goldman.
The firm’s global head of commodities research, Jeff Currie, told Bloomberg TV, “I don’t see why there is all this hostility to it.” Bitcoin is “not much different than gold” because it doesn’t have liability attached to it, by definition, like a security.
Also in an interview with Bloomberg TV, the top boss at Goldman, CEO Lloyd Blankfein, when discussing bitcoin said, “I don’t have an investment in it, but I'm not willing to pooh-pooh it, and that’s why I say I'm open to it.”