Bitcoins, which lost 45 percent of their value after skyrocketing to more than $1,100 last year, are poised to tumble further, according to the latest Bloomberg Global Poll of financial professionals.
Fifty-five percent of those surveyed said the virtual currency trades at unsustainable, bubble-like prices, according to the quarterly poll of 562 investors, analysts and traders who are Bloomberg subscribers. Another 14 percent said it’s on the verge of a bubble. Only 6 percent of respondents said a bubble isn’t forming. The remaining 25 percent were unsure.
The results show skepticism of the virtual currency even as technology entrepreneurs, venture capitalists and hedge funds plow money and effort into building it into a global payment system. Bitcoin prices have swung between more than $900 to as low as $341 this year as enthusiasts try to address the digital currency’s weaknesses, persuade consumers to embrace it and overcome governments’ concerns that it could be misused by criminals.
Bitcoins emerged from a 2008 paper written by a programmer or group of programmers under the name Satoshi Nakamoto, becoming the most popular virtual currency. It relies on a public ledger and cryptography to record transactions and protect ownership.
Bloomberg’s poll, conducted July 15-16 by Selzer & Co., a Des Moines, Iowa-based firm, has a margin of error of plus or minus 4.1 percentage points.
Bitcoins, which traded for about $13 at the start of last year, were valued at about $625 late yesterday. Prices plummeted in the first quarter as the Mt. Gox bitcoin exchange, once the world’s largest, collapsed and as governments around the world sought to head off money laundering, warned about thefts and tightened regulation.
The price has rebounded since hitting this year’s low in April, climbing 83 percent as entrepreneurs announced projects to facilitate the currency’s use. Merchants including Expedia Inc., Dish Network Corp. and Overstock.com Inc. have decided to accept bitcoins. A total of 63,000 businesses now take the virtual currency, and people have set up more than 5 million wallets to keep their digital holdings, according to CoinDesk, which tracks its use.
Xapo, a provider of secure online storage for bitcoins, said July 8 it doubled the amount of money it has raised from investors to $40 million, the most gathered by a startup focused on the virtual currency. Earlier this month, venture capitalist Tim Draper, 56, bought a cache of almost 30,000 bitcoins that were auctioned off by the government.
That enthusiasm contrasts with opinions expressed by finance-industry leaders. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon, 58, has said bitcoins probably won’t last as a currency after governments subject them to rules and standards akin to those for other payment systems. Billionaire investor Warren Buffett, 83, has said he’ll be surprised if bitcoins last 10 or 20 years.
A Bloomberg poll in January showed investor doubts in the virtual currency as well. Almost half of 477 international investors, analysts and traders who are Bloomberg subscribers were bearish on bitcoins and said they would sell them. At the time, bitcoins traded about 30 percent above current levels.
Online surveys have shown more enthusiasm for the virtual currency. In a poll published by CoinDesk on Jan. 2, more than half of 5,500 people surveyed said they expected bitcoin to reach $10,000 this year.
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