Taking stock of Bitcoin's merits and risks as a long-term portfolio asset

THE mantra of "lower for longer" often used to describe the trajectory of interest rates certainly does not apply when it comes to describing cryptocurrency prices.

Bitcoin briefly touched US$1trillion in market capitalisation in April this year, before losing more than half its value in just the following three months. Yet with its stellar gain of more than 40 per cent within the month of October alone - no doubt catalysed in part by the launch of a Bitcoin futures ETF - it re-entered the trillion-dollar club and broke a new all-time high in the process. Not bad for a month's work.

The analysis of cryptocurrency valuations can be extremely polarising. On the one hand we have more traditional investors who proclaim that the exuberance over cryptocurrencies is this generation's "tulipmania" (referencing the infamous account of the speculative bubble in tulips back in the 17th century Dutch economy). On the other hand we have crypto maximalists who believe Bitcoin and the like to be modern monetary messiahs to liberate the world from the evils of the banking sector and fiat currency printing.