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Big money stays away from booming bitcoin

Monday, October 23, 2017 - 01:48

Bitcoin is booming, digital currency hedge funds are sprouting at the rate of two a week and the value of all cryptocurrencies has surged tenfold this year to more than $170 billion. But as Kate King reports, mainstream institutional investors are steering clear, taking the view that it is too lightly regulated, too volatile and too illiquid to risk investing other people's money in.

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From movies to markets, London's wealthy suburb of Notting Hill is no stranger to a little attention. But the district where Paddington bear also lived could soon have another claim to fame. A mansion there could be about make British property history. It's on the market for 18 million pounds and the seller - London Wall - wants the buyer to pay in bitcoins. The wealth management firm considers it a "fair and transparent" way to move money around the world. (SOUNDBITE) English SENIOR MARKETS ANALYST, OANDA, CRAIG ERLAM SAYING: "It's going well because it's an exciting prospect. It's going well because people I think generally agree that crypto-coins of some kind are likely the future." The value of all cryptocurrencies has surged tenfold this year to more than $170 billion. And every week two new digital currency hedge funds are launched. But mainstream investors continue to steer clear. (SOUNDBITE) English SENIOR MARKETS ANALYSTS, OANDA, CRAIG ERLAM SAYING: "A lack of regulation in liquid markets is always going to deter large institutional investors. Volatility people say is positive for the markets and it is, but what we see in Bitcoin is extreme volatility." When you're dealing with other people's money some find it hard to stomach big downturns. One recent high of $5,200 quickly became $3,000. (SOUNDBITE) English SENIOR MARKETS ANALYSTS, OANDA, CRAIG ERLAM SAYING: "While prices could still double or treble or quadruple, it wouldn't surprise me if bitcoin is trading at 20,000 by the end of next year for example there is also the case that it may crash and burn." But 12,000 people have reportedly signed a global petition urging Amazon to start accepting Bitcoin. And that could be a game changer.