Bitcoin Drops Again. Skeptical Investment Strategist Calls It 'Useless' (cnbc.com) 98
Friday Bitcoin closed at just $59,948 — dropping 19% just for June and more than 50% lower than its record high in October of $124,310.
To commemorate the occasion CNBC interviewed long-time bitcoin skeptic Jeremy Grantham, reporting that the 87-year-old cofounder/chief investment strategist of the massive asset-management firm GMO is "predicting it will gradually fade into irrelevance over decades." [The] longtime market commentator known for his calls on asset bubbles said bitcoin is a "useless, speculative" asset without intrinsic value, speaking on CNBC's "Squawk Box" Friday. He also said bitcoin hasn't outperformed during a bull market and questioned its practical use. "[Over] years and years, decades and decades, it will dwindle away, I suspect — not with a bang, but a whimper," he said. "It's not a stable form of value — it just halved ... for no particular reason in a strong economy, so you can't depend on it in that way."
He added that gold has still delivered solid gains over the same period, even after pulling back from its highs. Bitcoin not only hasn't proved itself as a useful asset to speculate on, it doesn't provide any real world utility either, Grantham argued. "People don't use it to make serious trades, they don't use it to buy their dinner and pay at the supermarket. ... What it does is allows crooks to move money around," he said.
Bitcoin has become notorious over the years for its dramatic bear market crashes, which has taken it down at least 70% from its peak in every cycle.
The article adds that "many investors believe the current price slump could drag on for several more months."
To commemorate the occasion CNBC interviewed long-time bitcoin skeptic Jeremy Grantham, reporting that the 87-year-old cofounder/chief investment strategist of the massive asset-management firm GMO is "predicting it will gradually fade into irrelevance over decades." [The] longtime market commentator known for his calls on asset bubbles said bitcoin is a "useless, speculative" asset without intrinsic value, speaking on CNBC's "Squawk Box" Friday. He also said bitcoin hasn't outperformed during a bull market and questioned its practical use. "[Over] years and years, decades and decades, it will dwindle away, I suspect — not with a bang, but a whimper," he said. "It's not a stable form of value — it just halved ... for no particular reason in a strong economy, so you can't depend on it in that way."
He added that gold has still delivered solid gains over the same period, even after pulling back from its highs. Bitcoin not only hasn't proved itself as a useful asset to speculate on, it doesn't provide any real world utility either, Grantham argued. "People don't use it to make serious trades, they don't use it to buy their dinner and pay at the supermarket. ... What it does is allows crooks to move money around," he said.
Bitcoin has become notorious over the years for its dramatic bear market crashes, which has taken it down at least 70% from its peak in every cycle.
The article adds that "many investors believe the current price slump could drag on for several more months."
something is useless (Score:2)
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Well, he is correct in that speculation isn't useful. He did kind of missed out sanction busting though. North Korea is known to use it.
Re: something is useless (Score:1, Insightful)
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Which is why I said "kind of". It depends on how one defines a crock. In the case of sanctions, I guess just means any country that dares defy USA. Except for Israel of course. USA is Israel's bitch.
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The uses for bitcoin seem to mostly decrease as it becomes more popular. It's great for sending money around without paying taxes or getting the attention that taking a briefcase full of bills through the airport gets... until bitcoin gets popular enough that governments recognize it as a briefcase full of cash.
Re:something is useless (Score:5, Interesting)
It's starting to look as though this vote of confidence for bitcoin [whitehouse.gov] was the kiss of death, although the rot really set in around 3 months later.
Re:something is useless (Score:4, Insightful)
That's just par for the course, everything el Bunko touches dies: bitcoin, the reflecting pool, human rights, civil rights, minority rights, voting rights, the environment, financial oversight, justice, the Justice Dept., the military, health care, etc... The only think he could touch that would not suck is a vacuum cleaner.
Re:something is useless (Score:5, Funny)
Re:something is useless (Score:5, Insightful)
I suspect Kim Jong Un got better grades in college than our dear leader
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Of course he did, but maybe not for the reasons you're implying.
Kim Jong Un's daddy (Kim Jong Il) was the Supreme Leader before him.
Kim Jong Un's granddaddy (Kim Il Sung) was the Supreme Leader before him.
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That's just par for the course, everything el Bunko touches dies
Here's hoping he leans into crypto currencies big time, then.
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To be fair to our esteemed Dear Leader, human rights, civil rights, minority rights, voting rights, the environment, financial oversight, and justice are all intended to fail.
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So there's not a lot of hope that Trump will push Bitcoin up to $250k anymore. Wouldn't surprise me if it settled around $45k (based on organic use of legal and illegal mone
Crypto is a grift (Score:3, Insightful)
Crypto depends entirely on money laundering for its value and when you have criminals in charge of the justice system there's no enforcement so t
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When people stop trading it, then it will be useless. Little to no trades will be the nail in the coffin, regardless of the price.
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"because it does follow the chart I predicted." Ok dude
"it doesn't provide any real world utility either, Grantham argued. "People don't use it to make serious trades, they don't use it to buy their dinner and pay at the supermarket. ... What it does is allows crooks to move money around," he said.
Do you dispute any part of this guy's explanation of why bitcoin is "useless." Aside from black market money movement and financial speculation, bitcoin literally has no practical use.
Re: something is useless (Score:1)
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WHich is different from crypto how? You print it from doing large amounts of useless work on a computer that provides no value and is immediately thrown out. Or the new proof of stake algorithms, in which you print it by having previously printed it. I'll take cash, thanks.
Re: something is useless (Score:1)
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When the words you're stuffing into someone's mouth don't bear any resemblance to what they said, your "OK dude" doesn't have that oomph you believe it to.
The shocker to me is that the major media provided him with a platform to speak. Usually media guys are just harangued by promoters and scammers and they get the airtime.
Re: something is useless (Score:2)
Luckily I invested my saving in ugly monkey pics (Score:1)
Those ugly boring boar monkey pics will be worth billions my best friend said.
Since I didn't even own the picture, I just printed out the QR code to my monkey and put it above my couch.
Everyone took a picture of it and doing such an big investment feels awesome.
obvious? (Score:1)
One day, when everybody lost interest, the price will suddenly increase again and the mass hysteria can start all over.
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Yeah, and now them moving to the U.S. leaves them in the same boat.
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It is basically a bet against the current economic system.
When economy is bad, bitcoin goes up and vice versa. If everything crashes, bitcoin will skyrocket up as people will have to use it.
It is a good thing it is around in case of emergency, such as for example the hot new commodity bubble popping.
He is largely correct (Score:4, Insightful)
Having no intrinsic value means there is no floor to its value, unlike gold which at least exists physically has some uses.
Bitcoin also has strong positive correlation with the stock market, whereas gold does not.
Mark Cuban also recently dumped most of his Bitcoin, stating it "lost the plot" and failed to act as a hedge against inflation and geopolitical turmoil.
If you are trying to smooth your portfolio due to other volatile assets, unfortunately, bitcoin can only make things worse.
I do not personally directly invest in either bitcoin or gold.
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".. and failed to act as a hedge against inflation and geopolitical turmoil."
Bitcoin is mostly traded in USD, so Bitcoin will be tied to the USD.
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Bitcoin used to have a strong correlation with the stock market, but not over the past year. While the stock market continued to go up, Bitcoin tanked by 50%.
Bitcoin seems to have it's own weird 4 year price cycle, and we're in the middle of the "price crash" part of that cycle right now. It will be interesting to see if it recovers this time.
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1 year is a fairly short investment horizon, though. Not really worth talking about correlation. Over the last 5 years or so, stock market and bitcoin have been more positively correlated. A lot of it is because of institutional ownership. Anyway, I'm not seeing a good use for holding bitcoin personally. If I was a gambler, I would invest in individual stocks. At least companies sometimes produce something.
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The market is saturated with cryptocurrencies. I think it's finally percolating into the public consciousness that anyone can create one. Bitcoin was novel at one poi
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Having no intrinsic value means there is no floor to its value, unlike gold which at least exists physically has some uses.
Having intrinsic value does not mean there is a floor to its value. The value is set by demand and supply (ie, how much is available and how much people are willing to pay for that).
For example, air is arguably the most valuable thing we can possess, far more important than gold or even water. Yet, I will not pay a single cent for it because it is so abundant. I don't need to pay for it.
(You might consider watching some youtube videos about economics or something, solidify your understanding so you d
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Only because no one has figured out how to force you to pay for it.
If someone forces you to pay for something, it's a distorted market. That's a different scenario.
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Nope. Econ 101 fucks up. The COST is set by supply/demand. The VALUE is set by need. As we have seen with the RAM-pocolypse, neither neither supply nor demand is necessarily generated by need.
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Nope. Econ 101 fucks up. The COST is set by supply/demand.
Dunning-Kruger is strong with you.
neither neither supply nor demand is necessarily generated by need.
This shows your ignorance. You live in a parallel universe called "ignorance." There are two curves, a supply curve and a demand curve. Where they cross is the price.
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At least we agree on something.
You don't know how to plot supply/demand curves. You have never seen a set of supply/demand curves. Your entire comment is nonsense.
Seriously, you can educate yourself out of ignorance! Fix your ignorance!
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Where I differ is refusing to associate cost/price with value.
"Value" is too variable and subjective to be a global concept. The only useful way to define "value" is "What a given person or entity will pay". Your gamr-boi puts a very high value on a game. I would value the game at very close to zero. Probably not actually zero... if you offered me a big bundle of games for a penny, I'd buy them because a there's some tiny possibility that I might want to play one or two of them sometime in the future. Especially if the purchase is digital (e.g. Steam) so I don't a
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There are two curves, a supply curve and a demand curve. Where they cross is the price. :P
This is extremely simplified
In general: the price is as high as the seller can get away with. "Supply and Demand" as "basic economics" only works in niche cases.
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"Supply and Demand" as "basic economics" only works in niche cases.
Wow, another Dunning-Kruger genius who is about to win a Nobel prize in economics by proving all experts wrong.
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There are simple counter examples:
People are starving, as supply just meets a bit below everyone needs to survive.
The people who have the money: pay anything you demand.
Has nothing to do with "supply" or demand. As it is a fundamental human need to have the food.
Then lets look at an iPhone ... there is no need for it. People buy it, because they want/desire it. The price is determined on how many people you can convince for what ever price you can get away with.
Has absolutely nothing to do with "supply" and
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"Supply" and "Demand" is a child's game explanation about markets.
I will cheer for you when you win the Nobel prize in economics for proving all the experts wrong.
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There are simple counter examples:
These aren't counter examples. The important thing is whether you can draw the supply curve and draw the demand curve and find where they meet in equilibrium. It doesn't matter if the demand curve is shaped because or hunger or because of convincing advertising.
The important thing is there are two curves and you need to understand them.
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No, I do not need to understand them.
They are hypothetical curves useful to teach some basics.
They do not happen in real live, and I am not in a business, where it would matter, if they happen or not.
Fact is: Germany has an oversupply of empty flats.
And Germany is in an housing crisis, because people need houses/flats and get them: by government aid. But can not get them on the market.
The market that should adjust "supply and demand" is not happening.
Re:He is largely correct (Score:5, Informative)
There are two curves, a supply curve and a demand curve. Where they cross is the price. This is extremely simplified :P
In general: the price is as high as the seller can get away with. "Supply and Demand" as "basic economics" only works in niche cases.
Where the curves cross is the highest profit the seller can get away with. This is precisely how the curves are defined.
When talking about supply and demand, people commonly misunderstand that both curves are fundamentally about price, not availability or desirability. The supply curve is "How much is available at each price level". The demand curve is "How much will be bought at each price level". At prices above or below the intersection point, sellers are failing to maximize their profit.
It's profit-maximization that pushes prices to the supply/demand intersection point.
Note that monopoly or monopsony don't invalidate the supply/demand curves, they just alter them. Even with a perfect monopoly, the supply and demand curves still exist; at different price levels the monopolist can obtain more or less to sell, and at different price levels the buyers will purchase more or less. Supply and demand curves don't work or not work in different market conditions. Supply and demand curves always hold, non-competitive market conditions just shift the curves. Even government price setting doesn't change this fundamental reality... it makes price ranges legally inaccessible, which just alters the curve shapes by adding legal risk to the "price".
Supply/demand curves aren't a prediction, they're an observation, and the basic concept is near-tautological.
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I'm going full off-topic pedant here, but that's not right. If the demand curve is very flat (almost horizontal), then a large increase in price will create almost no drop in demand, which gives a huge gross-margin boost. Extreme example of this is Pharma Bro / Martin Shkreli bumping the price of Daraprim by like 50x, because people would pay anything to stay alive (which Shkreli braz
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The crossing of the two curves indicates the point of maximum product/units that could be sold, not maximum profit.
Fair. In a competitive market those are the same things, but monopoly situations -- especially government-enforced monopolies, like patented drugs -- create curves that behave differently.
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Mark Cuban also recently dumped most of his Bitcoin, stating it "lost the plot" and failed to act as a hedge against inflation and geopolitical turmoil.
To be fair, only the utterly clueless and the lying assholes ever made that claim. This thing is worse than useless, because all it does is create instability and burn value.
well, he is (Score:1)
What I can't understand is why people expect bitcoin to be an investment target. It is not, it never was, it wasn't designed to be one.
It works as shortcut around SWIFT and for that purpose it is adequate. It is a clearing system.
Re: well, he is (Score:2)
If it had stayed as a quirky, niche little way for a few thousand nerds to exchange value over the internets, it would probably have been quite useful.
It was the rampant speculation that ruined it.
Re: well, he is (Score:2)
The speculation is necessary to increase the market cap so that the remaining amount in circulation is valuable enough to make transactions.
Re: well, he is (Score:2)
I understand the mechanics and incentives of the mining enabling the growth of the blockchain, I just think that a few thousand individual nerdy enthusiasts mining on a spare cpu and using bitcoin to pay for goods exchanged within their group (although across geographic and fiscal borders) would have been sustainable. The arms race of speculative mining and the use of bitcoin to do large-scale crime is what has led us to the vast power consumption to enable a comparatively small number of transactions that
Bitcoin is worth nothing but hot air ! (Score:5, Informative)
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What it does is allows crooks to move money around," he said. This is why it still exists.
The fact that fine art is "worth" hundreds of billions also allows crooks to move money around. As confirmed by the master artist, Hunter Biden.
They just do it with tax accountants rather than guys that break legs for a living.
A lot of shit exists, because Greed.
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They can't bear the thought of someone, so masculinely named, and a financial genius, having so much more money than they do. They have to belittle his achievements. It's called Hunter Derangement Syndrome.
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Art is also subject to wash trades all the time to maintain value. Andy Warhol art, for example, is controlled by a couple of billionaires. If a new piece is discovered, it's immediately bid up to maintain the value of the collection. It doesn't matter if it was a sketch on a napkin only worth $10,000, they will ensure it won't go for less than $200,000.
And they'll
Diversity! (Score:2)
It's not just for TV shows.
"Just" 59K (Score:1)
I remember selling my hoard of Bitcoin at $4500 thinking how absurdly high it was and that it was just a fluke and how stupid it all seemed. Look who's stupid now. I still retired, but "if I'd just HODLed" I'd be a retired philanthropist instead of just retired and comfortable.
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EVERY currency is inherently worthless.
Does not matter if it is USD or EUR or Bitcoin.
The worth comes from being able to use it for trade.
And that is it.
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Completely untrue. You need to find out how a "central bank" works and what it does. Might stop you from making utterly stupid claims like this one.
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Why?
What has a central bank to do with the fact that all our current currencies have no intrinsic value?
Unless you think lighting a fire in winter with "some paper" is a value "in itself".
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Funny how you just confirmed you have no understanding of things. Maybe, when no clue, STFU!
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I have most certainly have an idea what "intrinsic value" means.
Like a non rotten potato versus a rotten one.
Or a cold beer versus a warm one.
Or a full bottle of beer, versus an empty one.
In the middle of a desert your intrinsic valuable $5 bill from the central bank:
- does not buy you a potato, rotten or not
- does not buy you a bottle of beer, cold, warm, or empty or all of it.
The word "intrinsic" has a meaning.
As a self proclaimed computer scientist - professor actually IIRC - you should have had Pascal o
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Central banks do a lot of useful things, but they don't give currency a value (they can, however manipulate the value others give it by printing it, destroying it, changing interest rates, changing the amount of reserve banks need and the multiple they can lend, etc). What gives a currency value is supply and demand- the fact other people want that currency. Which is also what sets international exchange rates.
There's also the fact you need it to pay taxes, which sets a base amount of demand. But beyond
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This is simplified grossly enough to be wrong.
Re: "Just" 59K (Score:2)
The only reason it has any value is because people think it has value. But then again, is that any different from any other kind of currency?
Well, yes. A currency has value because a bunch of things are priced and negotiated in it. You have a bajlion sellers of a loaf of bread guessing what buyers might pay, and you have a metric schiznillion bread buyers bidding with their wallets and you wind up at an average price of 2 Cronats per load of bread. You repeat that with a bunch of global commodities and you have some benchmarks to say 1 Cronat should be worth about 1.3 Bahlsax, then you have currency markets where people buy and sell each and thi
Keeps costing more to find coins (Score:1)
There's a working group of cryptographers... (Score:3, Interesting)
This isn't a particularly well-funded or dedicated effort, it's just something being done ad hoc. So it may go nowhere. But if it does succeed, then it'll be quite amusing to watch every crypto bro cry as their "investment" suddenly becomes worthless, even to the other fake money criminals.
Re:There's a working group of cryptographers... (Score:4, Informative)
There's a working group of cryptographers who are spending some of their time researching Bitcoin (and other cryptocurrencies) in an attempt to reduce their value to zero.
Cite?
I find that extremely unlikely. The cryptography behind BTC is very simple and very robust. Oh, it's certainly the case that if someone were to break any of the cryptographic elements they'd have made a name for themselves that would result in them being showered with opportunities in both academia and industry, but (a) that's extraordinarily unlikely and (b) the primary benefit of doing that work wouldn't be related in any way to BTC. Oh, and it would also take down lots of other important uses of cryptography, like TLS. That doesn't make it not worth doing. The fact that it would break so much other stuff is what makes it worth doing.
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Is it still going to be amusing when they reach into your pocket for a bailout?
Not true (Score:2)
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Destroying earth. Last I heard, it uses as much energy as the nation of Argentina.
The Swamp (Score:1)
Beware the Whale Triggers (Score:2)
Who knew bitcoin was fool's gold (Score:2)
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To be fair, there is a nearly endless supply of fools. I would not mind so much if these cretins were not making things worse for everybody else.
An investment? LOL (Score:1)
Strong economy???? (Score:2)
hahahahaah. Tells you all you need to know about this guy.
Funny how this always happens (Score:2)
Yawn. We've heard it all before. I'll believe crypto is dead if it keeps heading downhill until 2040. This is just another part of the cycle. And crypto is far too useful (read: no banks!) to just toss aside.
Bitcoin is worth ... (Score:2)
Bitcoin is worth whatever the market says it's worth. But it does have some features that are very hard to replicate.
1. Security: The solid technical and game-theoretic basis means that even a nation state working for years to accumulate hash power and energy production would need to spend something like $200B to wrestle control of the network from the native miners and nodes. It would also be unlikely to last due to difficulty adjustments. At best, you could hope to temporarily undermine confidence in t