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Holly's Blog: It's blowing a hooley in cryptoland

21 May, 2021

It’s not just blowing a hooley in my garden. A tornado swept through crypto markets this week.

WILL SOMEBODY SORT OUT THE FECKIN’ WEATHER, ALREADY!?

It’s not just blowing a hooley in my garden. A tornado swept through crypto markets this week.

Bitcoin is 40% off its highs. (Well – it was – by the time you finish writing a blog on bitcoin, any performance %s in the piece will almost inevitably be wrong as the price will have moved!) As I write this on Friday morning, 1 bitcoin is worth about £28,000. It was £23,000 on Wednesday. And about £31,000 on Monday.

On Wednesday, regulators in Beijing warned banks and other financial institutions not to accept cryptocurrencies as a means of payment, and forbade them to use crypto as a means of payment or to offer crypto-related services and products.

My Twitter feed (@hollyamackay for any of you not already saturated with these weekly ramblings) burst into life with financial advisers and pundits racing to say a collective “ I TOLD YOU SO!” “Tulips!” “Nonsense!” “Finally!” There was a lot of rather undignified dancing on assumed crypto graves.

No-one is immune to Fear Of Missing Out and with any bubble, there comes a point near the top where many of us secretly wonder if we are being the people who want faster horses whilst Henry Ford is inventing the car. The secret relief of logic prevailing as bubbles burst is a tonic for the ego, as we can pat ourselves on the back, our wisdom intact.

There’s a BUT coming though peeps. Although I have no idea what crypto currency will prevail, and over what timeframe, I think it is here to stay. The compelling logic of a blockchain-enabled currency, a decentralized currency, is too lovely not to work.

First iterations have got it wrong in terms of their carbon footprint. The murky underbelly of the criminal world. The wild speculation which has seen too many young people lose money they couldn’t afford to lose. But with names like JP Morgan, Goldman Sachs and Morgan Stanley facilitating client access to crypto, this asset class is on the journey from weirdo to normal. So I don’t write it off just yet.

Over in more traditional markets, where people use their money to back solid things from real companies which make products we can touch and services we can use (ha how RETRO!)……..The FTSE100 is above 7,000 as our local index continues to march ahead, with most commentators bullish on our economic outlook. Smaller UK companies are also having a moment – my Standard Life UK Smaller Companies Trust is up 11% in 3 months. The Marlborough UK Micro-Cap Growth is another perennial favourite of fund selectors. But do have your eyes open if you research this – for example, this fund is already up by 70% over the last 12 months. So my comments are not prophetic, just observational. But it’s a timely reminder to make sure that we have well diversified assets in different markets, regions and sectors, but also different sized companies too.

Have a lovely weekend everyone. My kids have exams next week. So I have another weekend ahead of trying to remember how to do algebra, what plate tectonics are and why Napoleon was a git. And how do you keep a small person off a computer when all their flaming schoolwork is on a computer? I wish they would bring back lovely solid papery textbooks…..if global markets are going off digital stuff, can’t schools too?

Holly