Broken representation of the Bitcoin virtual currency, placed on a monitor that displays stock graph and binary codes, are seen in this illustration picture, Dec. 21.Dado Ruvic/The Globe and Mail
Due to the popularity of this newsletter, we're adding a third regular edition each week. This third edition will cover the hot topic of bitcoin and other cryptocurrencies. Look for this new newsletter every Thursday evening in addition to our two regular weekly newsletters on Tuesday and Friday evenings. As always, please send us your feedback. – Globe Investor editor Darcy Keith
This week's big read: Four glaring flaws that every investor should know about
Bitcoin has earned the love of speculators thanks in large part to a blaze of self-congratulatory promotion on the part of middlemen and early adopters. According to its fans, the cryptocurrency will disrupt the financial establishment, make it a snap to transfer wealth around the world and put control of the money supply in the hands of real people instead of central banks.
Maybe so. For now, though, it's important to check the big talk against the facts on the ground.
As the rhetoric around bitcoin reaches frenzied levels, the limitations of the digital tokens are also becoming abundantly clear. Ian McGugan explains four big flaws with bitcoin.
Blockchain ETF to offer Canadian investors another way to join the bitcoin frenzy
Investing in the ever-growing popular blockchain technology could be more easily accessible as Harvest Portfolios Group looks to launch the country's first blockchain exchange-traded fund. Harvest Portfolios has filed a preliminary prospectus with regulators in hopes of becoming the first firm to introduce an ETF that tracks blockchain technologies. With the ticker HBLK, Blockchain Technologies ETF has a management fee of 0.65 per cent and seeks to replicate the performance of the Blockchain Technologies Index. Clare O'Hara reports.
Cryptocurrencies steal volatility away from U.S. stocks
What drives volatility? In equities these days, it turns out, not much. With just 6.8-per-cent realized volatility in the S&P 500 Index, 2017 marked the least volatile year since 1964. Low correlation among stocks, muted inflation variability and market-friendly central bank policies all played a role. But that hasn't stopped investors from asking, "Who ate the vol?" We point them in the direction of cryptocurrencies. The volatility of bitcoin was almost 13 times that of the S&P 500 in 2017, a year in which both enjoyed strong price performance but with very different risk profiles. Dean Curnutt from Bloomberg Views explains.
Warren Buffett says he will never invest in cryptocurrencies
Mr. Buffett said he's no fan of cryptocurrencies and is confident that the run up in their value is fleeting. "In terms of cryptocurrencies, generally, I can say almost with certainty that they will come to a bad ending. Now when it happens, or how or anything else, I don't know. But I know this: If I could buy a five-year put on every one of the cryptocurrencies, I'd be glad to do it but I would never short a dime's worth."
A fool's bet, maybe, but sharks fuel crypto-mania stock rallies
Who the heck buys into this crypto-mania in the stock market? The answer just might surprise you. Turns out, some experienced day-traders are trying to ride the surge of buying that invariably follows companies that suddenly reinvent themselves as blockchain ventures. That's enough, market watchers say, to bring in high-frequency traders and computer algos. And to these players, what really matters isn't so much that crypto is real, but that the share-price moves -- and the quick profits -- are. Brandon Kochkodin from Bloomberg News reports.
Wind Mobile founder Anthony Lacavera taking blockchain firm Globalive public
Canadian entrepreneur Anthony Lacavera, best-known for shaking up the country's wireless industry by founding Wind Mobile, plans to take a new company public that's focused on the latest technology craze: blockchain. Globalive Technology Partners will join with other companies to help build software that incorporates blockchain technology into their businesses, then share in the profits and licensing fees that result. Lacavera is raising an initial $10-million in startup funding and plans to take the company public in Canada in the second quarter of 2018, he said in a phone interview. Bloomberg's Gerrit De Vynck reports.
JPMorgan's Jamie Dimon regrets calling bitcoin a 'fraud'
JPMorgan Chief Executive Jamie Dimon regrets having called bitcoin a "fraud" but would still not be interested in the cryptocurrency, he said in an interview on Fox Business on Tuesday.
Opinion: A reckoning is coming, but cryptocurrencies are here to stay
Security, transparency and profitability are arguably the qualities investors value most. Still, as we have seen over the past 12 months, investors have been willing to forgo transparency and security for the enormous profit potential of digital tokens, as their value offered through initial coin offerings (ICOs) has skyrocketed. The market during this time has seen unprecedented gains: a 6,000-per-cent increase in Litecoin, 8,000 per cent in Dash and an astonishing 39,000-per-cent price increase in Ripple. To grasp the impact in Canada, consider the S&P/TSX Composite index, which provided a steady annual return of 5.3 per cent over the past 12 months. In comparison, bitcoin over the same period provided a staggering return of 1,500 per cent. Matt Gold and David Kelman, lawyers at Cassels Brock & Blackwell LLP, talk about the latest development in cryptocurrency markets.
Stories from around the web that caught our attention
People Desperate to Buy Bitcoin Are Paying With Credit Cards
Bitcoin could end up using more power than electric cars
Bitcoin ETF fast track derailed by SEC liquidity, safety worries
More Globe Investor coverage
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Compiled by Gillian Livingston