HAMISH MCRAE: Bitcoin reaching $100k is a warning sign that the markets are overheated

That is madness bitcoin needs to break the $100,000 barrieras it was briefly on Thursday. But as Polonius says in Hamlet: ‘Though this is madness, yet it is unethical.’

Drunkenness is easily diagnosed. This is a useless item. It’s just a series of computer code that has no revenue and is supported by zero.

It’s hard to identify the investments that will come: no buildings will be built, no companies will be launched, no cures will be discovered. But there is an extrinsic value as people are willing to buy, trade and hold.

A year ago they put the value at $44,000. Two years ago it was $17,000. Go back another year to 2021 and it’s $50,000. Five years ago it was $7,500.

And it’s everywhere. You can argue about why people want to keep it, but it doesn’t happen.

Why should an anonymous seller pay $142 million for a 1955 Mercedes-Benz 300 SLR Coupe, as someone did two years ago? That is the highest price for a classic car. Or $6.2 million for the banana tape on the wall at auction in New York last month?

Bitcoin is like any other asset. The price is paid by the customer at a certain time. It’s that simple.

The ‘reality’ – what this rise in the price of Bitcoin says about global markets – is more complicated.

The current upheaval is fueled by expectations that the Trump administration will lead the a peer management system for crypto-currenciesbecause the price has increased almost 50 percent since the election.

This may expand the range of owners. But behind the increase is the strong performance of financial assets in general.

To pick just a few, US currencies are near all-time highs, there is also the German DAX index, and here in the UK the Halifax house price index shows that prices are increasing by 4.9 percent in the year and reaching a new record. .

There are laggards, of course, and old poverty FTSE100 index is one of them. But it’s up 8 percent this year, so unloved investment pieces have been dragged down by their more fashionable cousins.

There are many reasons why property prices are strong. We have had 10 years of central banks printing industrial amounts of money under their quantitative easing program. That has to go somewhere.

With artificial intelligence, a technological revolution is expected to bring significant improvements to the efficiency of service industries and the quality of their outputs.

There is likely to be more economic policy in the US, and interest rates are expected to fall again next year if inflation continues to decline. International policy makers, even in the US, have created a financial crisis.

Are we heading for a bubble?

However, there is a fine line between fluff and bubbles. So where are we now? It’s hard to feel positive about what has happened to the price of bitcoin.

If the intellectual property is increasing, the cry will be heard.

And even the most ardent supporters of cryptocurrencies have to admit that they are facing a suspicious scale.

US currencies are at the upper end of their historical values. But it hasn’t reached significant levels yet, so it’s called a bubble, not a bubble. We also know that flare-ups last longer than people think and can end suddenly.

I think there will be a big event to signal that the real estate bull market is over. We don’t have that yet. Bitcoin’s $100,000 surge is a warning that markets are overblown, but it doesn’t do much to rock the world’s boat.

We can have a crypto-crash without breaking too much in mainstream assets, especially real currencies.

In fact global share prices are unlikely to fall suddenly – there will be ups and downs before recovery.

We cannot follow the advice of Polonius: ‘Neither a debtor nor a moneylender.’

But the Bitcoin boom carries a message that this is a time for caution.