The View | Bankers don’t care if bitcoin is a bubble, as long as it can be traded

Bitcoin shows there is so much more to seduction than just showing up hungry. Over the Christmas holidays bitcoin (or cryptocurrencies) will shove aside family dinner topics as you or your relatives regale each other with real and virtual profits.

Bitcoin continues to trend upward. Retail and institutional investors’ unrealised gains are also swelling. Fewer investors are exiting their investments. Mainstream media attention and word of mouth assure that the investor universe is expanding. The main issue is how many are employing leverage from their brokers.

Bitcoin has grown in value from about 39 US cents to over US$18,000 in just eight years while doubling over December with US$290 billion of market capitalisation. Once the refuge of criminals’ illegal activities and illicit transactions, it has respectably graduated to greed and speculation, aided and abetted by legitimate financial institutions. Mainstream media has been brilliant: when the legend becomes fact, print the legend.

Now that the debate over whether bitcoin is a scam or the ultimate democratisation of finance has become even more polarised, we can move onto the issue of how to make money or avoid losses in bitcoin trading.

Bitcoin’s critics may revile its credibility, but if it rises another up 50 per cent then funds and individuals are missing out on a huge trade. But, like all professional investors or speculators you must ask what exactly is your methodology? If you cannot answer that question, you are not ready to be risking money. Don’t forget that subprime mortgages were once legitimate and credible, then their entire valuation and process became detached from reality.