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Peter Schiff: Bitcoin 'Biggest Bubble I've Ever Seen'

Economic guru Peter Schiff is warning savvy investors that the controversial digital currency bitcoin is the “biggest bubble I’ve ever seen.”

The CEO and chief global strategist of Euro Pacific Capital Inc. said he is sure that the digital, virtual currency is a bubble, describing it as very dangerous.

“In fact, it's probably the biggest bubble I've ever seen in my career as an investor and I've seen quite a few bubbles,” he recently told RT, a Russian international television network funded by the Russian government.

Meanwhile, the biggest cryptocurrencies resumed their decline on Sunday, failing to reverse a selloff that began when bitcoin’s unprecedented rally fell short of breaking above $20,000, Bloomberg reported.

A rebound on Saturday fizzled in the afternoon and traders turned pessimistic again, driving bitcoin down 13 percent in the past 24 hours. The drop among the 10 largest digital coins, ranging up to 19 percent for iota, brings more end-of-year weakness to a market that just had its worst four-day tumble since 2015.

Bitcoin was at $13,288 as of Sunday midday Eastern time. That’s almost one-third off its record high of $19,511, based on prices compiled by Bloomberg. Ethereum, the No. 2 cryptocurrency by market value, also dropped 13 percent in the past 24 hours, to $651.16, CoinMarketCap data show.

To be sure, Schiff explained that such volatile price gyrations probe his theory that bitcoin is a bubble.

“I'm familiar with this psychology that surrounds them and bitcoin has all of the characteristics of a bubble. In fact, it's not just bitcoin, it's the entire cryptocurrency space,” he said.

“It is a pure speculative, digital asset that as soon as it stops going up, it's going to implode,” he said.

“Maybe we've seen the top, and maybe we haven't. I think when the top is in, I think this thing is going to come crashing down it's not just going to go down slowly," he explained.

“There's an expression that ‘markets take the stairs up and the elevator down.’ Bitcoin took a rocket ship up and it's going to come down even faster," he said,

And the consequences can be severe if investors aren't careful, he warned.

“People who are buying into this thing at these prices or higher prices are going to lose basically everything,” he said.

“These currencies are going to trade to zero or pretty close to it once this bubble pops, because right now the only reason that people are buying bitcoin is because the price is going up," je said.

"And when it turns around then they're going to be selling it for the same reason. There's no value in the bitcoin. You can't use it as money, it's too slow, it's too expensive and too volatile so it's not a medium of exchange it's not a ‘store of value’ because there's no value to store," he said.

Schiff isn't alone in his skepticism about bitcoin and other cryptocurrencies.

Mike Novogratz, the former macro hedge fund manager at Fortress Investment Group, on Friday told Bloomberg he had halted plans to launch a crypto-currency hedge fund.

“We didn’t like market conditions and we wanted to re-evaluate what we’re doing,” he told Bloomberg.

His Galaxy Digital Assets Fund was due to start on Dec. 15, but he called clients on Dec. 12 and told them he had changed his mind, Novogratz said in an interview with Bloomberg.

Novogratz told Reuters in November he hoped to raise about $500 million, making it the largest fund of its kind.

Meanwhile, just how much interest there is among U.S. regulated firms to step into the crypto-currency market is difficult to gauge. Some of the largest U.S. firms in recent weeks have voiced conflicting views over virtual currencies, in particular bitcoin.

JPMorgan chief executive Jamie Dimon called the cryptocurrency a “fraud” that would eventually “blow up.”

However, Dimon’s chief financial officer, Marianne Lake, seemed to undercut her boss’s views when during a recent third quarter earnings call with analysts, she said: "We are very open minded to the potential use cases in the future for digital currencies that are properly controlled and regulated," Reuters reported.

Morgan Stanley’s CEO, James Gorman, meanwhile, has also offered a measured view, calling bitcoin “more than just a fad,” while Lloyd Blankfein, head of Goldman Sachs, said the firm was “still thinking” about the digital currency, after reports emerged that the bank was exploring a new trading platform dedicated to crypto-currencies.

Meanwhile, Abigail Johnson, CEO of Fidelity Investments, has perhaps taken the boldest approach yet among U.S. firms, allowing its clients to see their holdings of bitcoin and other virtual currencies held on digital asset exchange Coinbase on the company’s website.

The wide range of views among incumbent institutions is perhaps not surprising. Banks and regulators, both here and abroad, are grappling to understand how digital currencies might transform existing payment and banking services, Reuters explained.

(Newsmax wire services contributed to this report).

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Economic guru Peter Schiff is warning savvy investors that the controversial digital currency bitcoin is the “biggest bubble I’ve ever seen.”
peter, schiff, bitcoin, bubble
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2017-05-24
Sunday, 24 December 2017 02:05 PM
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