Bitcoin continues its sharp decline.
The digital currency Tuesday tumbled more than 6%, falling to $32,000 and ending the day at roughly $33,300, after U.S. officials seized more than $2 million in bitcoin tied to the Colonial Pipeline ransom. While questions remain as to how the U.S. gained access to the hacker’s bitcoin wallet, concerns arose about how impregnable the cryptocurrency may be.
Michael Binger, president of Gradient Investments, says security is just one of the reasons he remains on the sidelines when it comes to bitcoin.
“I understand that crypto is a global currency, it’s unregulated; I understand that some may be concerned about U.S. inflation and a weakening dollar, but I still think that gold is a better hedge if those are your concerns,” Binger told CNBC’s “Trading Nation” on Tuesday.
Bitcoin is seen by some investors as the digital alternative to gold, holding a store of value that can hedge inflation risk.
“Crypto is just way too volatile, way too speculative for our client base,” said Binger. “I really think the crypto market is more for retail traders who are trading on price momentum both up and down and a handful of corporations that are willing to take a swing at it.”
Gina Sanchez, CEO of Chantico Global and chief market strategist at Lido Advisors, is also steering clear of the asset.
“We’re still sellers of bitcoin,” Sanchez said during the same interview. “The broader market and the economy, quite frankly, are showing a lot of money shifting back into the economy through consumption and through investment, and it’s hurting all speculative assets.”
Tuesday’s sell-off was just the most recent drop for bitcoin. It has also come under pressure after Tesla reversed a decision to allow payments to be made in the coin and as the threat of regulation in the U.S. and overseas looms.
“Bitcoin lands solidly in that space as a speculative asset, but we’re also seeing SPACs, IPOs, all get hit, all at the same time, and we see this as just a sign that money is moving away from speculation back into the real economy,” added Sanchez.
