- The asset manager bets against Bitcoin saying that it has no intrinsic value.
- He said that cryptocurrencies have just out like a religion for several of the new market entrants.
Bitcoin (BTC) and the overall crypto market have seen a strong bounceback. From the mid-July lows, Bitcoin has rallied 70 percent to the north moving past $50,000 levels before entering a major correction earlier this week on Tuesday.
As of press time, Bitcoin is trading at $46,379 levels and has a market cap of $871 billion. Just in the last two days, Bitcoin has eroded $150 billion of investors’ wealth. At this junction, global investors have been warning investors of this unprecedented price rally.
Hamish Douglass, the chief investment officer at Australia’s asset management giant Magellan Financial Group has warned about the upcoming crash in crypto. Douglass has earned the name for being Australia’s most successful fund manager as his company manages over 113 billion AUD in net assets under management.
He also warned that the crypto market crash is inevitable and that Bitcoin is likely to see its value going to zero. “I predict all these forms of cryptocurrencies that are not backed by central banks or backed by assets will ultimately go to zero,” he said.
Well, this is certainly a pretty bold claim considering Bitcoin has been the best-performing asset class with over 200 percent compounded returns over the last decade. Furthermore, Douglass is not the first to make such a negative price prediction for Bitcoin.
In the past, many big market analysts have said the same when Bitcoin was trading sub $20,000 levels. However, the world’s largest cryptocurrency has proved all the critics wrong time and again.
The crypto market is full of irrational behaviour
Douglass terms the recent price rise in the crypto market as totally irrational. Explaining his reason behind a dramatic tumble, Douglass said that the crypto market is currently in a speculative bubble.
He says that cryptocurrencies have no intrinsic value and despite that investors are just paying high prices for them. He further warned:
Cryptocurrencies, I have to say, are one of the greatest irrationalities I’ve seen in a very, very, long period of time because of the cult-like following it has behind it and the scale that is behind it.
Pointing out at the rapid market participation, Douglass added: “There are millions and millions of people participating. Some of the people, they’ve never invested before and the only bandwagon they’ve ever got on is the cryptocurrency bandwagon and it’s almost like a religion.”
A Swedish central banker also shares almost similar views. While speaking at a banking conference in Stockholm, Riksbank Governor Stefan Ingves said: “Private money usually collapses sooner or later. And sure, you can get rich by trading in bitcoin, but it’s comparable to trading in stamps”.