Report says Bitcoin could lose its shine in the longer term
Singapore
BITCOIN is nursing losses after its worst weekly plunge in almost a year, and on one view that its longer-term outlook could be dimmed because of environmental concerns and tightening regulations.
The amount of energy needed to mine Bitcoin and the prospect that governments will create more obstacles for the largest crypto currency point to the token losing "most of its value over time", BCA Research Inc said. The expense and slowness of Bitcoin transactions make it "unsuitable as a medium of exchange", BCA Research's chief global strategist Peter Berezin wrote in a report. Also, environmental, social and governance-focused funds are likely to shun companies linked to Bitcoin due to the large energy consumed by miners on computer networks.
Bitcoin is still up more than five times over the past year, a rally that has pitted believers in the asset class against those who see a speculative bubble.
Governments will create more obstacles because they could lose billions in revenue from the difference between the face value of money and the cost to produce it - said BCA.
"Many companies have cosied up to Bitcoin in order to associate themselves with the digital currency's technological mystique," BCA's Mr Berezin said. "As ESG funds start to flee Bitcoin, its price will begin a downward spiral. Stay away."
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Bitcoin, the largest crypto currency, was up 2.5 per cent to US$46,359 just before noon in Hong Kong on Monday. That leaves it well off the record high of US$58,350 set just over a week ago. BLOOMBERG
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