Caveat emptor for those still in thrall of cryptocurrencies

CRYPTOCURRENCY investors are no strangers to setbacks and criticisms. But even the most ardent proponents of the virtual currencies must have been shaken at the recent violent sell-off which saw bitcoin, the best-known of cryptocurrencies, dip briefly below US$6,000 last week, in tandem with the global equity selldown. It has since recovered to about US$8,800 - a far cry from the almost US$20,000 it fetched in December 2017.

Cryptocurrency backers could argue that US$8,800 is still a fantastic return when viewed over a one-year period or longer. Indeed, bitcoin was changing hands at less than US$1,000 each at the start of 2017. But such an argument only serves to underline the speculative and volatile nature of the cryptocurrency market.

As the head of the Bank for International Settlements, Agustin Carstens, pointed out, the wild gyrations in the value of cryptocurrencies undermine their utility for transactions and as a stored value.