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Very dangerous, difficult to grasp, and unreliable. That’s how business analyst and investment manager Justin Urquhart Stewart characterizes the recently authorized exchange-traded funds (ETFs) that follow the price of bitcoin.
A game-changer for the industry that has been trying for more than a decade to launch such a product, regulators approved the first U.S.-listed exchange-traded funds (ETFs) to track the world’s largest cryptocurrency, Bitcoin.
On Thursday, the digital currency, which operates without any central control or oversight from banks or governments, held steady.
Urquhart Stewart, however, is advising extreme caution. He said to CGTN Europe when asked if these permits give cryptocurrencies legitimacy, “That is the big question.
It will gain some credibility now that it’s back in the mainstream. However, the majority of individuals are unaware of the risks and how they work, which is problematic.
It’s essentially gambling that has been elevated, and some people have profited greatly from it.
Many others have also lost a great deal of money as a result of it. Thus, we must exercise tremendous caution.”
Eleven applications for these products were authorized by the Securities and Exchange Commission (SEC), which is regarded as a historic step that may increase their attractiveness to investors. However, should investors be rushing into these kinds of projects?
Urquhart Stewart continued, “In terms of risk of losing money, it does happen quite a bit.”
“Investment profit is a long-term endeavor. Compounding the dividends over time is how money grows. Our racecourses exist if you’re simply going to place a wager on it.
With this, I worry that you’re encouraging consumers who are accustomed to cheaper tracker funds, exchange-traded funds, and similar products.
“You’re now adding something to it that they don’t comprehend, and that may be really harmful.
That’s acceptable for experienced investors, then. However, the typical investor must exercise extreme caution when handling their hard-earned money.”
Urquhart Stewart stressed the necessity for “regular, clear and understandable” cryptocurrency regulation.
He cautioned that “even if there is regulation, you only have to look at banking over the past two decades,” adding that the regulation of banking “didn’t do a lot of good for anybody.”
It is crucial to approach these things with extreme skepticism, particularly when it comes to how they function, how dangerous they are, and how quantifiable they are.
“I shall be reasonably aware of the likelihood of what will happen when I invest in a business.
A catastrophe might occur, for sure, but I can spread my risk. Regretfully, distributing the risk in this instance will attract additional bitcoins.
There are bound to be more of them arriving; we’ve already seen some fairly odd ones.
“I fear that this will promote a segment of the market that isn’t quite developed enough to be considered mainstream.
It’s complex enough for the experienced gambler to enjoy it to the fullest, but for most investors, steer clear.”
Disclaimer: The information provided in this article is for educational purposes only and should not be considered financial advice.
Cryptocurrency investments are inherently risky, and readers should conduct their own research and seek professional advice before making any investment decisions.
