Legendary gold analyst Michael Dudas has labelled bitcoin a ‘dicey investment’, in the latest warning from a mainstream financial analyst in recent weeks.
Dudas, of Vertical Research, said that the combination of heavy capital inflows and minimal regulation had created a challenging environment for investors.
“It’s a very speculative investment right now… Just in the last few days, the amount of volatility the market has seen has made headlines around the world…There’s still just a lot of misunderstanding or a lot of education required about the supply of these different cryptocurrencies [and] how it’s going to play out over the longer term.”
However, in spite of the warnings, Dudas considered the launch of futures on two US exchanges in December as a watershed moment for the currency, cementing its place as an asset for the long term.
“Putting this into the marketplace certainly adds a sense of legitimacy to the bitcoin markets. But again, it’s early stages, and markets do go both ways…The markets and investors might find an opportunity with these exchanges to be a little bit more negative, and be short the coins as opposed to long.”
The comments come off the back of turbulent trading in bitcoin in the last two weeks. After hitting all-time highs in mid-December that threatened the landmark $20,000 barrier, bitcoin retreated to just over $10,400 at its lowest.
However, since then, the markets have regained some further ground, trading as high as $15,138 at the time of writing. But while the markets have shown some considerable resilience, Dudas remains cautious on the potential impact of regulation in future.
“If there are some very big volatile issues and the public gets hurt in any sense, I think that could cause a chill to this market without question…The regulation aspect from a government could cause the market to fracture a bit.”
The comments from Dudas are particularly pertinent, with many analysts suggesting bitcoin markets behave like a form of digital gold. With Dudas’ particular expertise in gold, the comments are likely to be given weight by other analysts and investors.