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NY Post's Trugman: Main Street Should Avoid 'Unregulated and Volatile' Bitcoin

NY Post's Trugman: Main Street Should Avoid 'Unregulated and Volatile' Bitcoin

By    |   Monday, 08 January 2018 08:17 AM

A well-respected New York Post columnist applauded Merrill Lynch’s move to keep its millions of small-time investors away from bitcoin.

Jonathon Trugman said the bank’s move was “smart and will ensure those clients won’t have sleepless nights.”

Bitcoin is a virtual asset that can be used to move money around the world quickly and with relative anonymity, without the need for a central authority, such as a bank or government.

Bitcoin is one of the wildest trades in the market today, delivering sharp gains and losses that defy explanation. Trading has been expensive and difficult, with brokerages offering limited access and specialist websites like Coinbase reporting regular outages. Top voices on markets from economist Robert Shiller to JPMorgan Chase & Co CEO Jamie Dimon have warned people off buying bitcoin.

As of Dec. 8, the Wall Street brokerage stopped approving new orders for the Bitcoin Investment Trust due to concerns about the "suitability and eligibility standards of this product," according to the memo sent to roughly 17,000 brokers at Merrill Lynch and Merrill Edge, a unit for clients who manage their own trades, Reuters reported.

“Sure, bitcoin is the flavor of the year, soaring from $970 to $20,000 in 2017. But it also traded at under $14,000 just six days after bubbling above $20,000,” Trugman wrote for the Post.

“It’s unregulated and volatile — something Main Street investors should avoid,” he wrote.

To be sure, Wall Street has taken a cautious approach to digital currencies, which are unregulated and have very volatile trading patterns.

Last month, Chicago-based derivatives exchanges Cboe Global Markets and the CME Group launched bitcoin futures, but some banks and brokerages remain reluctant to trade them, Reuters reported.

“Though bitcoin is likely to evolve into a less volatile asset, the craze today reminds me of the 1990s’ know-it-all yuppie tech stock fad. Remember, people were in search of and often buying startup tech stocks that offered little more than a hope, a prayer and a crazy story about how they were going to take over the world,” he wrote.

“So many of those tech darlings turned out to be dogs — and took those investors down with them,” he wrote.

“Will bitcoin become the future of digital currency? Maybe. Are digital transactions and encrypted currencies the future? Most definitely. But let’s wait for them to become less volatile before we invite everyone to the party,” he wrote.

Bitcoin was recently trading at about $14,970.

Meanwhile, U.S. fund managers are ramping up efforts to tap into the fever surrounding digital assets, and the latest planned bitcoin products could deliver some head-turning and stomach-churning price movements if they come to market.

The new idea is to build “leveraged” and “inverse” funds that would rise - or fall - twice as fast as the price of bitcoin on a given day, Reuters reported.

Direxion Asset Management LLC plans to list such products on Intercontinental Exchange Inc’s NYSE Arca exchange if U.S. securities regulators give the nod, according to a filing by the exchange this week.

In the filing, the exchange said the listing “will enhance competition among market participants, to the benefit of investors and the marketplace.”

For his part, Newsmax Finance Insider Ed Moy predicts that the volatile digital currency isn't going anywhere.

"Bitcoin is here to stay," says Moy, who served as the 38th Director of the United States Mint from 2006-2011.

"When supply is limited and demand increases, the price usually goes up. But when speculators drive the prices up, there usually is a major correction," Moy wrote in a recent Newsmax Finance blog.

"And after the correction, the true value of bitcoin will be obvious."

(Newsmax wire services contributed to this report).

© 2019 Newsmax Finance. All rights reserved.

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A well-respected New York Post columnist applauded Merrill Lynch’s move to keep its millions of small-time investors away from bitcoin.
merrill lynch, bitcoin, ny post, trugman
Monday, 08 January 2018 08:17 AM
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