Some people think it is the future of money while others, such as Warren Buffet – a man who knows a thing or two about investing – think it’s a scam and would never go near it.
Now crypto – one of the most volatile investments with a see-saw chart of prices that can defy gravity or plumb the depths – is trying to go mainstream.
It will give you no comfort that the small Central American country of El Salvador has embraced Bitcoin as legal tender. But this week, it was claimed those venerable institutions, the superannuation funds, might recognise the “coin”.
To be clear: there are no big and reputable superannuation funds moving into crypto in Australia. AustralianSuper does not have a crypto investment option. The stories were generated by Jeff Yew, the chief executive of Monochrome Asset Management and a former director of crypto currency exchange Binance.
He predicted a “flood” of crypto investment by super funds and financial advisors.
“Thirty years ago, portfolio managers would have had high yield bonds because they’re risky, but now they’re a staple in most diversified asset portfolios. If you extrapolate that to the rise of Bitcoin, you can easily see it becoming more of a reality each day.”
Could be true. Could be rubbish. But we need to bear in mind: Yew is a crypto disciple.
So why all the interest? Well Bitcoin is sitting at 15 per cent of its all time high as we write – could be twice as high or three times as low by the time you read this. We don’t know.
Sensible fincial site Forbes tells us the digital currency reached $57,655.50 around 10:30 a.m on Tuesday.
Interestingly Forbes adds: Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.
You see the problem – and desperation to appear mainstream.
Until recently, most traditional banks refused to deal with the crypto exchanges and have “unbanked” them on more than one occasion, but a new generation of what are called “neo-banks” are filling the gap.
Check out, for example, a deal last month between new digital bank Volt and crypto exchange BTC Markets.
Under this deal, you can open an AUD account with Volt and have it tied to your BTC Markets’ account and move funds in and out much more easily than you could from any other unlinked bank account.
As the market matures, we are also likely to see the advent of mutual funds or Exchange Traded Funds (ETFs) which enable investment in crypto currencies, and these would be attractive investments for super funds, including self-managed funds.
BlackRock is the biggest fund manager in the world and two of its funds, the Strategic Income Opportunities Fund and the Global Allocation Fund are able to invest in Bitcoin.
Available more widely, these funds will allow you to simply make a financial commitment to a fund and get a fund manager to invest in crypto on your behalf, or invest in an ETF fund which tracks the performance of one or a number of different crypto currencies.
The products are beginning to be available overseas, particularly in the US market, and are likely to inevitably make their way to Australia as more mainstream providers, such as Vanguard and BlackRock, get involved in the crypto sector. Only last month, regulatory ASIC revealed it was pondering the implications of making a crypto ETF available in Australia.
This is the point at which crypto will truly go mainstream. If you could buy an ETF you wouldn’t actually hold any crypto currency, but your dollars would buy into a fund which would track the value of a particular crypto currency or a basket of them combined. This would be as easy as buying an ETF which mirrored the performance of ASX 200 Index.
But we are not there yet. More should be known from the report of a parliamentary inquiry into cryptocurrency regulation which is due to the bring down its findings by the end of the month.
In the meantime, you can either go direct to a crypto exchange like Binance or BTC. Or you can educate yourself over the summer bbq and learn as much as you can from the mistakes and triumphs of others in preparation for the day when you too will take the crypto plunge.
Just remember what Forbes said: “Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.”