Should you invest in bitcoin? Investment advisor Mercer is warning to stay away from cryptocurrencies

Lynsey Barber
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Consultancy Mercer thinks bitcoin is a "speculative bubble" (Source: Getty)

An investment adviser has warned against investing in bitcoin and other cryptocurrencies amid growing interest spurred by recent price rises.

Mercer, the US consulting firm, said they are not an "investable proposition" in their current form and are likely a "speculative bubble".

Read more: S&P: Retail investors will be biggest losers of bitcoin bubble bursting

"Although the blockchain technology underlying cryptocurrencies holds significant promise in areas such as trade processing and settlement, cryptocurrencies have yet to prove that they offer much more than the benefit of anonymity and the potential for large price fluctuations," said Phil Edwards, partner and global research director at Mercer.

"We do not view cryptocurrencies in their current form as an investable proposition," he added.

The firm said in a note that it does not see cryptocurrencies as a store of value either, "directly, via futures or via hedge funds set up to speculate on cryptocurrency price movements".

Read more: £4bn is being laundered through cryptocurrencies

"They offer no income to the passive holder of coins (that is, non-miners), and assessing fair value is close to impossible. In addition, the wave of cryptocurrency launches and the spectacular price increases seen over 2017 exhibit many of the hallmarks of a speculative bubble," said Edwards.

The price of bitcoin has recovered somewhat following a global sell off in January, during which billions was wiped off its value having reached highs of nearly $20,000 (£14,299) late last year. It was trading at $11,471 at pixel time.

Credit rating agency S&P yesterday warned that retail investors would be the biggest losers if the bitcoin "bubble" burst and the value of cryptocurrencies crashed.

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