Ed Yardeni, a highly respected economics and investments researcher, recently observed that the technology behind bitcoin has shown the potential to have a wide-ranging impact on financial markets, Dieterich wrote.
Recent developments in the financial markets have not bolstered confidence in government-sponsored currencies, Yardeni observed. Bitcoin and gold, which attract people who are wary of traditional financial institutions, have rallied.
Yardeni noted research papers have cited bitcoin as a new asset class. In addition, financial institutions are exploring ways to use blockchain technology to reduce costs and improve security.
Yardeni’s most dramatic observation about the cryptocurrency is the way it has been used to digitize currency in Africa, allowing people to store it on their cellphones without having to open a bank account.
Referring to blockchain technology as “blocktrade,” Yardeni said the technology has the potential to have a more wide-ranging impact on financial markets. He noted that banks and brokers have started to explore how “blocktrade” helps to track trades and cut trading costs.
A niche ETF company, Ark Invest, last year bought units of the Grayscale Bitcoin Investment Trust (GBTC) and made one of its ETFs the first to own some form of bitcoin, Yardeni noted. Admitting that he was skeptical at the time, Yardeni said he hedged his skepticism by saying to treat bitcoin as a lottery ticket.
However, this past week’s bitcoin surge brought the GBTC price up 34%, leaving the ARK Invest ETF with about 3.5% of its weight in the BIT. Yardeni noted that ARK Invest published a report this month with Coinbase that calls bitcoin a new asset class.
The GBTC has almost doubled over the past month, he noted.
Yardeni also observed that the SPDR Gold Shares exchange-traded fund is up 23%, this year pulling in more than $10 billion in new assets.
The gold and Treasury bond assets have been driven by fears that central banks cannot improve the economy. Also pushing the assets are fears that a United Kingdom referendum will undermine the European Union.
As for Treasury bonds, the iShares 20+ Year Treasury Bond ETF is up 14% in 2016, the highest level in a year.
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