Unhedged: bitcoin is equity, not money
- Date: 20-May-2021
- Source: Financial Times
- Sector:Financial Markets
- Country:Middle East
Unhedged: bitcoin is equity, not money
Welcome back to Unhedged. If you have thoughts (and because today’s topic is bitcoin, many of you will), email me: [email protected].
Bitcoin is equity, not moneyÂ
Years ago I was hired, with no experience in finance, as a trainee analyst at a hedge fund. I asked my soon-to-be boss how I should prepare. He said: “Get a financial calculator and learn to use the net present value keys. That’s really all there is to it.â€Â
He was right. I have thought ever since in terms of streams of future cash flows, terminal values, and discount rates. Every other analytical tool I have acquired since has been secondary.
Which is why I am uneasy doing what I need to do today: write about bitcoin, an asset far beyond the comprehension of my HP-12c (millennials may now go look up what that is). The value of the stock of bitcoins fell by 29 per cent at one point today, a decline in value of $225bn. Here is the price of an individual bitcoin through the day on Wednesday (with the final tick on Tuesday included on the left) (data from Bloomberg):Â
Furthermore, bitcoin and the overall market trend seemed to be linked. From Refinitiv:
Something needs to be