IOOF group general manager of wealth management Renato Mota has said in a statement that digital currencies do not carry real value in and of themselves.
“Bitcoin is not being extensively used as a medium of exchange and has no intrinsic value other than its inbuilt scarcity,” Mr Mota said.
Echoing comments made by AMP Capital chief economist Shane Oliver in November who warned against the “rollercoaster of investor emotion”, Mr Mota pointed to concepts in behavioural finance, such as anchoring (“relying too heavily on the first piece of information received”), confirmation bias (“interpreting new evidence as confirmation of existing”), herd behaviour and overconfidence as factors clouding investors’ ability to make good judgements.
Mr Mota also added that the bitcoin craze could be attributed to people’s ‘fear of missing out’ on potential windfalls.
“People like to think they are clever enough to find shortcuts to wealth, but there aren’t any.
“Hard work, continual learning, patience and of course good financial advice are the most important components,” he said.
A report by S&P Global Ratings released last week called cryptocurrency a “speculative instrument” and said the buzz surrounding virtual currency was “much ado about nothing”.
Similarly, RBA governor Philip Lowe derided the “current fascination” with cryptocurrencies as “speculative mania” in December last year.