The writer is chairman of Fulcrum Asset Management
Investors in bitcoin and other cryptocurrencies have enjoyed a phenomenal run, but they are now worried that Janet Yellen’s arrival as US Treasury secretary may herald a new era of hostility from regulators and central banks towards what boosters call “libertarian” forms of digital money.
In her last press conference as chair of the Federal Reserve in 2017, Ms Yellen said bitcoin was a “highly speculative asset” and “not a stable store of value”. These dismissive remarks were echoed by many other public officials at the time. Since then, however, the market value of bitcoin has roughly doubled. Digital currencies are here to stay.
In the first crypto frenzy of 2017-18, comedian Jon Oliver described bitcoin as “everything you don’t understand about money combined with everything you don’t understand about computers”. The technology aspects, particularly the blockchain network of digital ledgers that are used to record transactions, have not really lived up to the initial hype, but they are beginning to make progress. The issuance of $20bn in “initial coin offerings” seemed to contain elements of a speculative bubble, but the funds raised are now being used to launch projects broadly similar to other IT ventures in Silicon Valley.