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Carmignac: why advisers should track Bitcoin's value

Investment boutique Carmignac calls turning tide of cryptocurrency Bitcoin days before its rapid crash, and says the currency value is a good barometer for risk-appetite.

Carmignac: why advisers should track Bitcoin's value

Bitcoin’s recent rapid crash should be seen as a measure of lower risk appetite in the market, according to investment boutique Carmignac.

Speaking at an event at the New Model Adviser® conference last week, Obe Ejikeme (pictured), quantitative equity analyst at Carmignac, suggested steering clear of the currency as an investment option but said tracking its journey can help advisers understand the market.

‘Most people have forgotten that the asset rose exactly the same way in 2013 and early 2014, before crashing later in 2014,’ he said.

‘If we are hitting another cyclical peak, then watching it is a good barometer for risk appetite. It makes me nervous, because if it can go up that much then perhaps there are other assets that have become inherently risky as well. But time will tell.’

Yesterday, the currency’s steep decline lead to its value halving from its previous peak.

It fell 53.09% from a peak of $20,042.90 on 17 December to a low of $9,402.29 on Wednesday.

Bitcoin’s value has now recovered to a five figure value, reaching $11,490 at the time of writing.

The currency has undergone a turbulent few months with a steep climb in value from November last year, causing many to warn a speculative bubble was forming, with analysts such as Ejikeme suggesting Bitcoin was headed for another crash.

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