While Bitcoin is rising once again Tuesday, Guggenheim Partners Chief Investment Officer Scott Minerd warns of cryptocurrencies’ dangers, saying most will collapse.
“Seventy percent of the coins are garbage and will go away,” he told Bloomberg.
The digital currency explosion will produce notable winners, just like the dot.com company boom of the late 1990s, with companies such as Amazon (AMZN) – Get Amazon.com, Inc. Report, Minerd said. But then there will be the cryptocurrency losers, just like Pets.com and other dot.com flameouts.
Bitcoin will presumably be one of the winners. Minerd noted that it’s not cheap, but wouldn’t recommend shorting it.
The cryptocurrency recently traded at $62,919, up 2%, hitting a six-month high as bitcoin-futures exchange-traded funds began trading in the U.S. Tuesday. Bitcoin has skyrocketed 96% year to date, with major corrections along the way.
The CMC Crypto 200 Index of digital currencies eased 0.3% Tuesday.
Meanwhile, the bitcoin debate continues to rage among bulls and bears.
Bulls say bitcoin’s use as a medium of exchange in normal commercial transactions will grow.
Bears point out that few consumers and companies will want to use such an unstable currency.
Bitcoin bulls say the digital asset is a hedge against inflation and a store of value. Bears note that the only thing bitcoin has proved to be so far is a vehicle for speculation.
The bulls also maintain that the currency can protect investors against declines in other markets, like stocks. But the bears note that since bitcoin was created in 2009, no sustained drop in stocks has occurred to test that theory.
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