- Veteran economist David Rosenberg says buying Bitcoin is more like gambling than investing.
- He says that valuing stocks, bonds, cash and commodities is much easier than valuing cryptocurrencies.
- Bitcoin is volatile, as evidenced by its price action following last week’s SEC decision, Rosenberg says.
Bitcoin and other cryptocurrencies are very volatile and difficult to value, making buying them more like a gamble than an investment, says David Rosenberg.
Stocks are a claim on a company’s future cash flows, bonds and savings accounts pay interest, while commodities have industrial uses and demand for them can be modeled using economic data, the head of Rosenberg Research said in a Monday morning note.
“These things are real,” Rosenberg wrote. “Do you want to get rich by believing in cryptocurrencies?” “Then stake your possessions with lottery tickets. Seriously – let’s get this under control.”
The former chief economist for North America at Merrill Lynch has argued that Bitcoin and other tokens are examples of the “greatest fool” theory in action. In other words, people buy them not because they have intrinsic value, but because they hope to sell them for profit to someone more foolish.
Rosenberg’s diatribe came after US regulators approved nearly a dozen Bitcoin ETFs last week. The veteran economist noted that the price of the most popular cryptocurrencies fell from a two-year high of $49,000 last Thursday morning, to $44,000 by Friday evening.
“Who needs this degree of volatility in their life?” inquire. “Not me, that’s for sure.”
Rosenberg’s criticism of cryptocurrencies mirrors the criticism he made to Business Insider last year. He emphasized that token prices could swing by 20% or 30% within weeks.
“Why add that to your portfolio unless you’re a gambler?” he wondered at the time.
Moreover, he emphasized the difficulty of measuring the value of assets that, unlike businesses or bonds, do not generate a return for investors.
“I don’t know how to value it,” he said. “So, as they say on Shark Tank – ‘I’m out.’”