Howard Marks Says That Bitcoin is Not An Investment
Howard Marks, the co-founder and co-chairman of the Los Angeles based Oaktree Captial Management has slammed Bitcoin stating that it is only a trade and not an investment because of the lack of substance.
He expressed his views on Bitcoin at CNBC’s eighth annual conference for institutional investors known as Delivering Alpha that was held in New York. According to Marks, Bitcoin, that has the highest market cap among cryptocurrencies, fails to fulfil the definition of an investment. He implied that all long-term investors are merely speculating its price. He stated that those who buy Bitcoin do so,
Not because they can specify its intrinsic benefits. Not because they can judge the intrinsic value. But only because they think it’s going up.
He also referenced to the ‘Greater Fool Theory’ to support his argument. According to this theory, the price of an asset is determined not by its intrinsic value, but by the expectations of the market participants. He further added that in the long run, he believes, bitcoin will have no substance.
Like other asset classes, Bitcoin has its fair share of speculative traders. While Marks has previously acknowledged that he doesn’t know much about what’s behind Bitcoin, he continues to slam the cryptocurrency and whoever invests in it.
However, his present talks on Bitcoin are lighthearted compared to his previous statements. In 2017, he labelled Bitcoin as an ‘unfounded fad’. He said,
In my view, digital currencies are nothing but an unfounded fad (or perhaps even a pyramid scheme) based on a willingness to ascribe value to something that has little or none beyond what people will pay for it.
His statements are similar to those of Jamie Dimon, the CEO and Chairman of JP Morgan Chase. However, just like Dimon, interestingly, Marks has also once admitted that he has been looking at cryptocurrency and Bitcoin in the wrong way.
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