Bitcoin continued to spark criticism, controversy – and a whole lotta love as it reached a market capitalization of $1 trillion on Friday.
None other than U.S. Treasury Secretary Janet Yellen was counted among the relative doubters during an interview a day earlier on CNBC.
Yellen told the network’s “Closing Bell” program that she believes bitcoin to be a “highly speculative asset,” referencing its high levels of volatility in recent years.
She also spoke of the need to protect investors.
“I think it’s important to make sure that it is not used as a vehicle for elicit transactions and that there’s investor protection,” said Yellen, a former Fed chair. “And so regulating institutions that deal in bitcoin, making sure that they adhere to their regulatory responsibilities, I think is certainly important.”
On Friday, the cryptocurrency hit another record high as cold, hard facts battled the opinion that bitcoin is a poor hedge against a fall in stock prices.
Yellen spoke generally about investors needing to use caution when exploring certain parts of the market.
When asked whether it made sense for major stock indexes to be trading near record highs during the past year’s economic downturn and global pandemic Yellen explained that relative affordability plays into the situation.
“Well, partly we’re in a very low interest rate environment,” Yellen said. “And while valuations are very high, in a world of very low interest rates, price earnings, tight multiples tend to be high. That said there, you know, may be sectors … where we should be very careful.”
Yellen took her current position in late January under President Joe Biden.
Bitcoin, meanwhile, had hit its all-time high — above $54,000 – by midday Friday, continuing a rise of more than 60% this month.