Jean Pierre Verster reveals why he does not invest in Bitcoin

Protea Capital Management founder and CEO Jean Pierre Verster said the inability to value Bitcoin accurately means he shies away from investing in it.

Bitcoin experienced an exceptional run over the last year, with the price increasing from $25,000 to $51,000. In 2024 alone, Bitcoin’s price has risen by 18%.

Bitcoin’s price rise was partly fuelled by the US Securities and Exchange Commission (SEC) approving spot bitcoin exchange-traded product (ETP) shares in January 2024.

While the SEC approved the listing and trading of certain spot Bitcoin ETP shares, it did not approve or endorse Bitcoin.

“Investors should remain cautious about the myriad risks associated with Bitcoin and products whose value is tied to crypto,” it said.

The Bitcoin ETPs make it much safer and easier for investors to get exposure to the cryptocurrency without dealing with crypto exchanges, wallets, and the like.

Verster previously explained that he was not investing in cryptocurrencies like Bitcoin because it is a speculative investment.

Most other investments return a yield. If you invest money, you will get interest on that money. If you invest in shares, you get dividends.

Cryptocurrencies like Bitcoin are different – they do not produce anything. You can, therefore, not get interest or dividends from cryptocurrencies.

The only way you can make money from cryptocurrencies is to sell it to another person at a higher price.

“I don’t like those types of investments because it makes me dependant on what the other person thinks the asset is worth,” Verster said.

Smart Money - Jean Pierre Verster
Smart Money – Jean Pierre Verster

Speaking to Smart Money with Alishia Seckam, Verster said the newly approved Bitcoin ETPs did not change his view about investing in cryptocurrencies.

He explained that he understands the utility of decentralised cryptocurrencies like Bitcoin, which include bypassing exchange controls and providing a safe way to process transactions.

However, Verster’s challenge is that he cannot value it. “I don’t know if a Bitcoin should cost $1, $10,000, or $100,000,” he explained.

He added that the situation is aggravated because Bitcoin can be broken up into smaller and smaller pieces.

“I am not against the concept of cryptocurrencies like Bitcoin. However, I just don’t know what to pay for it. I don’t know whether I am paying far too much or getting a good deal,” he said.

Verster explained that he analyses investments by looking at how much money he puts in versus how much he gets out.

“In the case of a company, I look at things like future profits and dividends. In the case of Bitcoin, it is what someone else is willing to pay. I don’t know what that will be.”