Bitcoin prices have roughly doubled from their July lows. And longer-term, even after the spring crash of bitcoin the digital currency has gone from a value of about $20 to start the year to the $130-to-$140 range currently.
Now the alternative stock exchange SecondMarket is providing a place for the alternative currency bitcoin to trade publicly. According to sources, SecondMarket will begin raising money for a bitcoin investment fund.
Bitcoin investing is going increasingly mainstream. In July, we got word of the the Winklevoss Bitcoin Trust — an investment vehicle launched by the Winklevoss twins who were famously embroiled in a dispute with Mark Zuckerberg over who came up with the idea for Facebook (FB).
The Winklevoss Bitcoin Trust is intended to operate much the same way the SPDR Gold Shares (GLD) trust, and be a proxy for investing in the currency.
Should You Buy Bitcoin Investments?
It’s not a surprise as to why bitcoin has come into favor, even if the idea of a wholly digital currency is a bit kooky to some. Amid continued quantitative easing from the Fed, global uncertainty and high debt levels in both the U.S. and Europe … well, a lot of investors are looking for a safe haven to park their cash.
To many, the U.S. dollar isn’t looking as safe as it used to. And given the volatility in gold prices recently, including a 25% decline in the last 12 months, bitcoin investing may seem lower risk even if it equally volatile and largely untested by the markets.
In these strange times, investors are willing to take on strange investments in the name of safety and lower risk.
And with yet another bicoin fund launching, this digital currency seems to be in the right place at the right time.
My two cents is that there are huge risks with bitcoin, and a lot of volatility ahead — both because of the very new nature of the investment and because speculators have clearly taken hold given the fast-moving pricing in bitcoins this year. If you’re looking for a safe haven, bitcoin probably isn’t it.
However, stability appears to have settled in and the launch of funds implies that this investment is most certainly legit.
Related Reading on Bitcoin
- On the SecondMarket Bitcoin Fund (Dealbook via NYT)
- The Winklevoss twins’ bet on bitcoin. (Reuters)
- Bitcoin daily pricing can be found here. (BitcoinCharts.com)
- Curious about investing in Bitcoins or how bitcoin works? (Bitcoin.org)
- Bitcoin recognized by Germany as “private money” a few weeks back. (CNBC)
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.