Richard Turnill, BlackRock economist, raises warning on Bitcoin, Ethereum bubble

Bitsy

Richard Turnill, BlackRock’s global chief investment strategist at BlackRock, the world’s largest fund manager has raised concerns over the exponential rise in the value of Bitcoin and Ethereum.

Richard Turnill, who is a top economist at the fund manager with 5 trillion assets under management Told Fortuna that the surging rise in blockchain currencies is getting close to a “dangerous territory,” similar to the Dotcom bubble.

Richard Turnill said “I look at blockchain, I look at the charts, and to me that looks pretty scary, and reminiscent of what we’ve seen before,”

It’s that kind of nervousness that has helped deflate some of the recent enthusiasm, which this year alone propelled the Bitcoin price up more than 200% to an all-time high of $3,000 in June, and Ether up more than 5,100% to a peak above $400. Just days after setting those records, though, Bitcoin and Ether crashed as much as 25% in a single day, and have so far been unable to recover.

The price of Ethereum is currently under $190, down more than 50% from its high less than a month ago. Bitcoin now trades at about $2,280, 24% below its peak. (But even with the selloff, the cryptocurrencies have still delivered spectacular returns in 2017 to date: the Bitcoin price has more than doubled since the start of the year, while Ether is worth more than 23 times its value at the end of 2016.

BlackRock, the world’s largest asset manager, is far from the first to express alarm over the rapid appreciation in the value of cryptocurrencies, which are estimated to exceed a combined $100 billion—greater than the stock market value of Goldman Sachs (GS, +0.49%). In early June, Mark Cuban tweeted about cryptocurrency, “I think it’s in a bubble,” prompting the price of Bitcoin to swoon 5%. Two weeks ago, billionaire investor Michael Novogratz, who has 10% of his wealth invested in Bitcoin and Ether, said he’d been selling many of his coins, suspecting that the digital currencies had already peaked for the year. Cryptocurrency, Novogratz further predicted, “is going to be the single greatest bubble of our lifetime.”

Another warning was raised by Goldman Sachs itself weighed in, warning that Bitcoin could fall another 19% from its current levels to as low as $1,857.

Bitcoin is not a legal tender in Nigeria and virtually all countries across Africa, however, citizens in Africa trade Bitcoin using foreign exchanges who mostly allow them to convert their Bitcoins to dollars (USD).

Over the last one year, there has been a surge in Bitcoin and cryptocurrency investment schemes, many which are operated via pseudo-cryptocurrencies that are not running on a blockchain technology or are mere Ponzi schemes. Analysts have linked the trend to the rise in the value of genuine digital currencies such as Bitcoin which are mostly used to transact in those schemes, they warn that such development is a source of concern that arguments about Bitcoin bubble could be genuine.

Last year, Nigeria’s Central Bank, CBN raised a stern warning alerting the financial markets on the rise of digital currencies and investment schemes linked to them including Bitcoin and the danger they portray for financial institutions who get involved. The apex bank warned that Nigeria has no law accepting Bitcoin and any other cryptocurrency as a legal tender.