Associate Professor, Finance, University of Western Australia Lee Smales does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment. University of Western Australia provides funding as a founding partner of The Conversation AU.

Republish our articles for free, online or in print, under Creative Commons license. The sharp rise and subsequent fall in Bitcoin’s value places it among the greatest market bubbles in history.

It has outpaced the 17th-century tulip mania, the South Sea bubble of 1720, and the more recent Japanese asset price and dot-com bubbles. The rapid price rise garnered attention from an increasing number of academics and investment advisers.

Some have suggested that Bitcoin improves portfolio performance and can even be used as a potential “safe haven” asset in place of gold. Our work finds that much of this research is flawed and overlooks some important attributes that any investor should consider before allocating funds to such a speculative investment.

This is particularly relevant if investing in Bitcoin is rationalised as a prospective safe haven in times of market turmoil. The first attribute investors consider is how to value Bitcoin. Read more from…

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