Think twice before investing in ‘toxic’ Bitcoin, says former chairman of Morgan Stanley

A highly respected economist and former chairman of Morgan Stanley has come out with a stern warning for investors who are considering expanding their portfolio to include the cryptocurrency Bitcoin.

Stephen Roach, who is a senior fellow at the Ivey League University, believes bitcoin’s recent surge in value towards the $12k mark is due to a “dangerous speculative bubble” that has been created by an unstable market. He has warned investors to stay away from what he described as a “toxic concept.”

During his interview with CNBC’s The Rundown, Mr Roach outlined his beliefs around the currency, stating that bitcoin’s current market value is one of the most dangerous economical occurrences he has ever seen.

He said: “I’ve never seen a chart of a security where the price really has a vertical pattern to it. And bitcoin is the most vertical of any pattern I’ve ever seen in my career,” while adding “this is a dangerous speculative bubble by any shadow or stretch of the imagination.”

Mr Roach’s comments are particularly alarming considering the economist long and decorated career. As well as his Yale position, he is also the former Asia chairman and chief economist at Morgan Stanley, a company where he spent most of his celebrated 30 year career.

“Mr Roach is obviously a well educated and respected economist, but I fear he doesn’t really understand the technology behind Bitcoin and how that has big impact on the price, his comment on CNBC “Have you yet to see anyone with a Bitcoin in their pocket” further strengthens my argument, this type of comment on a TV show is creating hysteria among people who are not familiar with Bitcoin for the sake of making headlines, it just doesn’t make any sense,” said Andrew Sung, Co-founder of CoinSpectator.

His comments come at the end of a remarkable year for the currency, where its value has surged by more than 1,000 percent. It’s thought that interest from retail groups and established exchanges have legitimised bitcoin and contributed to this rising value.

The Yale economist went on to warn that the cryptocurrency could be considered “dangerous” as it offers investors no “intrinsic underlying economic value.” He added that the “bubble” that he believes exist will eventually burst and investors will lose a great deal of money.

Time will only tell if this is old school economics clashing with the new method of the market, or whether Mr Roach has correctly predicted the fall of bitcoin.