Tags: saudi | prince | alwaleed | bitcoin | implode | enron

Saudi Prince Alwaleed: Bitcoin Will Implode; 'Enron in the Making'

Mikhail-Primakov/Dreamstime

By    |   Monday, 23 October 2017 10:52 AM

Saudi billionaire investor Prince Alwaleed bin Talal has joined the global chorus of naysayers who don’t believe in the digital currency bitcoin.

Bitcoin has surged about 500 percent this year. The cryptocurrency also hit an all-time high recently, breaking above $6,100 for the first time on Saturday, CNBC.com reported.

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.

Yet for all the hype, mainstream institutional investors are steering clear of the nascent market, taking the view that it is too lightly regulated, too volatile and too illiquid to risk investing other people’s money in.

"It just doesn't make sense. This thing is not regulated, it's not under control, it's not under the supervision" of any central bank, Alwaleed told CNBC.

"I just don't believe in this bitcoin thing. I think it's just going to implode one day. I think this is Enron in the making," Alwaleed said.

Bitcoin, the biggest and most well-known cryptocurrency, has outperformed all the world’s traditional currencies each year since 2011, except for 2014. But many investors still view it as an opaque, esoteric instrument used by gun-runners and drug-dealers on the Dark Web that should be avoided.

This year, though, a flood of new hedge funds focused on cryptocurrencies has offered institutional investors who might be unfamiliar with the market a potential route into the world of digital currencies, Reuters reported.

According to Autonomous NEXT, a financial technology research house, 84 so-called crypto hedge funds have been launched this year, taking the total to 110 with about $2.2 billion in assets altogether.

But the fact most of the funds are relatively small with a limited track record - and that cryptocurrency price swings have been so pronounced - means the world’s pension funds, insurance companies and large mutual funds are staying away.

“While cryptocurrencies are probably here to stay, they are difficult to analyze, wildly volatile and some may be prone to fraud,” said Trevor Greetham at Royal London Asset Management (RLAM), part of the Royal London life insurance company.

“Diversification is a good thing but that doesn’t mean investing in everything just because it’s there. We favor assets with a long track record in producing returns or reducing risks,” said Greetham, who heads RLAM’s multi asset team.

(Newsmax wire services contributed to this report).

© 2021 Newsmax Finance. All rights reserved.


   
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Saudi billionaire investor Prince Alwaleed bin Talal has joined the global chorus of naysayers who don’t believe in the digital currency bitcoin.
saudi, prince, alwaleed, bitcoin, implode, enron
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2017-52-23
Monday, 23 October 2017 10:52 AM
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