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Foolish Take: A contrarian view of bitcoin

The price of bitcoin has soared this year, going from less than $6,000 to over $16,000 at its high point last week.

John Maxfield
The Motley Fool

The rapid rise in the price of bitcoin this year has caused financiers to issue warnings that it may be in bubble territory. That list includes Warren Buffett, Jamie Dimon, Howard Marks, Jack Bogle, and any number of other respected investors with outstanding track records.

In fact, it's kind of hard to argue otherwise. Bitcoin is like a tulip; it doesn't generate value. If you buy a stock, you're buying a portion of the underlying company's earnings. If you buy a bond, you're promised interest payments. If you buy real estate, you get land that you can rent.

This suggests that the growth in bitcoin prices this year must be speculative, as there's no underlying value that's being generated to justify the rise.

The only thing more remarkable than bitcoin's price increase this year has been its volatility. There are ways to invest that gain exposure to the cryptocurrency without the investor having to buy bitcoin.

Yet this shouldn't be taken to mean that the rapid rise in bitcoin's price is wholly irrational.

Indeed, perhaps it's the asset that is most accurately reflecting the heightened risk in the markets today, given the vast amount of uncertainty in the political and policy realms. It's too early to say for sure if this is the case, but it would make sense given that, as a digital currency, it could be seen as an alternative to holding hard currencies, which could take a hit from the growing sense of unease coursing through the markets.

More: A Foolish Take: Retailers lowered Black Friday discounts

More: Investors: 5 market milestones that mattered in 2017

More: I owned bitcoin for a weekend and here's what I learned: It's crazy volatile

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