Quote
Economist David Rosenberg told Bloomberg he believes bitcoin is in a bubble and investors don't understand supply dynamics of the cryptocurrency.
"You speak to most people that are asking me to put money in bitcoin, they can't even tell you who the person was that developed it or even how it's actually mined," the Rosenberg Research chief economist said. "It's just a classic, follow-the-herd, extremely crowded trade. It's in a massive bubble."
Bitcoin reached a record high of $23,777 on Thursday shortly after topping $20,000 for the first time ever on Wednesday, marking a 20% gain over the past day. The cryptocurrency is now up over 200% year-to-date, but Rosenberg said the chart looks "absolutely crazy right now."
Bitcoin's rally comes as several institutional investors and fund managers place sky-high predictions for the coin. On Wednesday, Guggenheim's global chief investment officer, Scott Minerd, said bitcoin will surge to $400,000 based on its scarcity and value relative to gold.
Though Rosenberg raised his doubts about the scarcity of bitcoin and the thesis that only 21 million bitcoin are able to be mined.
"Everybody seems to believe that we're going to get to that 21 million cap on the supply constraint, but there's really nothing in the protocol to suggest that the supply of bitcoin can't go up once we hit that limit," the economist said.
While investors do know about the supply curve of gold with certainty, Rosenberg said that investors just "think they know" but don't really know about bitcoin's supply curve.
He added that the last time bitcoin behaved with such a "speculative fervor," it suffered massive disappointments in the months to follow. Bitcoin bulls say that 2020's rally is different because of the institutional inflows.
From: https://markets.businessinsider.com/currencies/news/bitcoin-price-bubble-david-rosenberg-supply-mining-cryptocurrency-outlook-record-high-2020-12-1029903485
"You speak to most people that are asking me to put money in bitcoin, they can't even tell you who the person was that developed it or even how it's actually mined," the Rosenberg Research chief economist said. "It's just a classic, follow-the-herd, extremely crowded trade. It's in a massive bubble."
Bitcoin reached a record high of $23,777 on Thursday shortly after topping $20,000 for the first time ever on Wednesday, marking a 20% gain over the past day. The cryptocurrency is now up over 200% year-to-date, but Rosenberg said the chart looks "absolutely crazy right now."
Bitcoin's rally comes as several institutional investors and fund managers place sky-high predictions for the coin. On Wednesday, Guggenheim's global chief investment officer, Scott Minerd, said bitcoin will surge to $400,000 based on its scarcity and value relative to gold.
Though Rosenberg raised his doubts about the scarcity of bitcoin and the thesis that only 21 million bitcoin are able to be mined.
"Everybody seems to believe that we're going to get to that 21 million cap on the supply constraint, but there's really nothing in the protocol to suggest that the supply of bitcoin can't go up once we hit that limit," the economist said.
While investors do know about the supply curve of gold with certainty, Rosenberg said that investors just "think they know" but don't really know about bitcoin's supply curve.
He added that the last time bitcoin behaved with such a "speculative fervor," it suffered massive disappointments in the months to follow. Bitcoin bulls say that 2020's rally is different because of the institutional inflows.
From: https://markets.businessinsider.com/currencies/news/bitcoin-price-bubble-david-rosenberg-supply-mining-cryptocurrency-outlook-record-high-2020-12-1029903485
It is important to note that Rosenberg identified the housing market bubble in 2005 right even before things started going south in 2008.
As experienced as Rosenberg might be in the field of economics, I don't think he grasps the idea of a hard-coded limit for bitcoin's supply. He might be right that we will never know what holds bitcoin's future should 21M coins be mined, but those values wouldn't even be achieved in a hundred years literally. Also, its specified scarcity makes bitcoin's value stand where it is, and if someone is going to change it just because it does not meet the need of people around the world, its price or valuation would be severely affected.
Stay in the path of centralization and easy-to-control assets for too long and you would really practice distrust on, and undermine decentralization and its concept. For more than a decade, no substantial changes on the max supply cap and other things connected to it has been made, plus no kill switch for bitcoin and its entirety is ever present to raise such questions IMO.