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Guggenheim's Minerd, UBS's Haefele Offer Sharp Crypto Skepticism

“Seventy percent of the coins are garbage and will go away,” Guggenheim CIO Scott Minerd told Bloomberg.
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While bitcoin is rising once again Tuesday, two market luminaries -- Guggenheim Partners Chief Investment Officer Scott Minerd and Mark Haefele, chief investment officer of UBS Global Wealth Management -- warned of cryptocurrency danger.

“Seventy percent of the coins are garbage and will go away,” Minerd told Bloomberg.

The digital currency explosion will produce notable winners, just like the dot.com company boom of the late 1990s, with companies such as Amazon  (AMZN) - Get Amazon.com, Inc. Report, Minerd said. 

But then there will be the cryptocurrency losers, just like Pets.com and other dot.com flameouts.

Bitcoin will presumably be one of the winners. Minerd noted that it’s not cheap, but he wouldn’t recommend shorting it.

The cryptocurrency recently traded at $62,919, up 2%, hitting a six-month high as bitcoin-futures exchange-traded funds began trading in the U.S. Tuesday. Bitcoin has skyrocketed 96% year to date, with major corrections along the way.

The CMC Crypto 200 Index of digital currencies eased 0.3% Tuesday.

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As for Haefele, "while we see potential for the technologies underpinning digital assets, we continue to view the coins themselves as speculative," he wrote in a commentary.

The reasons he cited: "Crypto regulatory risks have not gone away and are difficult to price in. ... Coins and tokens are volatile and of questionable value as a portfolio risk hedge. ... Central banks are on track to establish digital currencies of their own."

Meanwhile, the bitcoin debate continues to rage among bulls and bears.

Bulls say bitcoin’s use as a medium of exchange in normal commercial transactions will grow.

Bears point out that few consumers and companies will want to use such an unstable currency.

Bitcoin bulls say the digital asset is a hedge against inflation and a store of value. Bears note that the only thing bitcoin has proved to be so far is a vehicle for speculation.

The bulls also maintain that the currency can protect investors against declines in other markets, like stocks. But the bears note that since bitcoin was created in 2009, no sustained drop in stocks has occurred to test that theory.