Hargreaves Lansdown, the largest retail investment platform in the UK that manages around $225 billion in assets, has issued a surprisingly harsh warning to its clients: Stay away from Bitcoin. Cryptocurrency has “no intrinsic value,” he told his clients, and should not be included in their life savings and retirement plans.
HL is the third major financial institution to recently remind customers that cryptocurrencies can be based on nothing, following Deutsche Bank and Elliott Management.
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“While Bitcoin’s long-term returns have been positive, Bitcoin has experienced several periods of extreme losses and is a highly volatile investment – much riskier than stocks or bonds. HL’s investment view is that Bitcoin is not an asset class, and we do not think cryptocurrency has characteristics that justify its inclusion in portfolios for growth or income and should not be relied upon in it to help clients achieve their financial goals. It is not possible to analyze performance assumptions for crypto, and unlike other alternative asset classes, it has no intrinsic value,” the company said in a statement that also noted that the platform would begin offering cryptocurrency trading to customers.
A few days ago, Deutsche Bank told clients that Bitcoin was “backed by nothing,” although it was also likely to end up being used as a reserve asset by central banks in the coming years.
And in January, activist investor Elliott Management told clients that Bitcoin faced an “inevitable collapse” because, as an asset, it has “no substance.”
The argument that crypto has no fundamental value is based on the view that other assets – stocks, bonds, money, property or derivatives thereof – generally entitle holders to an underlying right, such as dividends, interest, land or other legal rights. Crypto, on the other hand, is merely a medium of exchange whose price only reflects the balance between supply and demand.
While HL is right that Bitcoin is volatile and risky, it has also been a profitable trade. Bitcoin is currently at $121,000 per coin and is up 30% this year compared to the S&P 500 which is up 15%.
“Fortune” contacted HL for comment, but there was no response.
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