Deutsche Bank strategist tells investors to avoid bitcoin

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Deutsche Bank (DBKGn.DE) has joined the ranks of those warning about the virtual currency bitcoin as an investment.

"I would simply not recommend this to the everyday investor," Ulrich Stephan, chief strategist at Germany’s largest lender, said on Wednesday.

Stephan said that fluctuations are too great and regulation too scant. He noted that German investors were reluctant to invest in stocks, but were generating hype about bitcoin.

Bitcoin smashed through the 8,000 US dollar level for the first time over the weekend, with many experts saying that 10,000 US dollars is not too good to be true.

Deutsche Bank/VCG Photo

An eightfold increase in the value of the volatile cryptocurrency this year has led to multiple warnings of a bubble, and institutional investors are broadly staying away.

Retail investors, however, as well as some hedge funds and family offices, are piling in despite JPMorgan Chase & Co Chief Executive Officer Jamie Dimon earlier this year calling bitcoin a "fraud."

China in September required all cryptocurrency exchanges to cease trading while banning fundraising through initial coin offerings, and Russia's central bank in October stated that it may soon arrive at a similar conclusion over the virtual currency, with legislation and regulation to roll out in the near future.

Although UBS Chairman Axel Weber urged caution on bitcoin last week, he also said there was potential for the technology underpinning it.

"At this point, I‘m very cautious about bitcoin as an entity. I‘m much more optimistic about the underlying technology," Weber added.

Sweden’s central bank is one organization which is investigating the potential for digital currencies.

Source(s): Reuters