Macaskill on markets: Bitcoin greed will overcome fear
An important step to confer respectability on trading in bitcoin and other cryptocurrencies was taken in mid December when analysts from Deutsche Bank highlighted the role played in the emerging market by male leveraged foreign exchange investors from Japan.
Their report gave a catchy name to a new investor type, ‘Mr Watanabe’, to distinguish the men who supposedly do this trading from the female Japanese equity retail investors stereotypically dubbed ‘Mrs Watanabe’.
This helped to rehabilitate the image of bitcoin investors, who had been widely viewed as divided between criminals seeking to launder illicit earnings and libertarian IT specialists with a limited understanding of how markets work.
It also provided comfort to financial market professionals, ranging from bankers to fund managers, who would like to profit from the newly booming market in crypto-trading and have been driven to despair by the effects of a prolonged slump in volatility across established asset classes.
The potential pitfalls of bitcoin trading have been widely discussed. Theft is common, transaction costs are high and the chances of bitcoin being adopted as a widespread means of payment are falling not rising, as recent wild price swings make establishing its value more difficult.