09 Nov 2021
Posted in Thematic Research
Bitcoin’s all-time high should ring some alarm bells, says GlobalData
Following the news that Bitcoin and Ethereum have reached all-time highs;
George Monaghan, Thematic Analyst at GlobalData, a leading data and analytics company, offers his view:
“While Bitcoin has legitimate uses, it definitely shouldn’t be the sixth-largest asset on earth by market cap. Reaching this position is one of two big red flags.
“The other is that investors are squirreling away Bitcoin in the hope that it will gain value, rather than using it as a currency. A product’s value should rise because people use it, not because they invest in it. It’s hard not to suspect that Bitcoin is a bubble just waiting to burst. Among the assets ahead of Bitcoin in market cap are Alphabet, Amazon, Apple, and Microsoft. These are companies whose products see daily use from billions of people.
“On the other hand, the number one asset is gold. Judging by current behavior, Bitcoin could plausibly occupy a similar store-of-value role in the global economy.
“While the long-term future of crypto remains unclear, we can be confident of a short-term ‘shitcoin season’: everyone flocking to crypto looking for free money; social media feeds becoming dominated by crypto “influencers” predicting the next big coin; useless coins soaring to market caps in the billions then collapsing within days. In the end, a few people will make lots of money, while many more will lose a fortune.”