UBS chief Paul Donavan doesn’t think too highly of Bitcoin.
I Hate You, I Hate You!
In a recent blog post, the global chief economist of the Switzerland-based wealth management firm UBS says Bitcoin is “not healthy,” and suggests it may be in its final days.
Bitcoin has been the subject of much hate and spurn throughout 2018 thanks to the ongoing bearish conditions that never seem to let up. The currency was selling for just under $20,000 in December 2017, getting several people excited about the prospects of blockchain and what Bitcoin could do for a seemingly ailing financial system.
Things Are Dropping Too Fast
But things weren’t as jolly as everyone hoped. People rang in the new year to the tune of Bitcoin dropping rapidly, and by February, Bitcoin was trading for a measly $11,000 – nearly $9,000 less than where it had stood two months prior.
Throughout 2018, bitcoin has fallen further and spent much of its time meandering through the $6,000 range, but the last two weeks have proven to be a major gamechanger for everybody’s favorite cryptocurrency. Thanksgiving, for example, brought on a new crypto bloodbath that saw Bitcoin fall to less than $3,600 – the lowest it had been in over 14 months.
You Got No Style – Or Value
Donavan suggests in his blog – entitled “I Come to Bury Bitcoin, Not Praise It” – that the developers behind the currency are virtually knowledge-less when it comes to economics. He scathingly writes:
The cryptocurrency bubble may be in its death throes. A loss of over 80 percent is not healthy. Economists said from the start that bitcoin and the like would never be currencies. They will never be currencies. Their designers are brilliant at math, but they appear to know nothing about economics. Real value comes from matchmaking supply and demand. Cryptocurrency supply can go up. It cannot go down. Demand for cryptocurrencies can go down. Demand was created by blind faith, not real economics. The failure to balance supply and demand destroys value. Value is being destroyed right now.
Repeat Yourself, Much?
For the most part, however, the post just seems to echo a report that Donovan issued last August, in which the chief staffer wrote:
[Bitcoin] falls short of criteria that need to be satisfied to be considered money. Fixed supply and unusual demand dynamics make the system susceptible to high price volatility, in turn making it difficult for bitcoin to step into the role of money or to be a viable new asset class.
Do you agree with Paul Donavan that bitcoin isn’t all it’s cracked up to be? Post your comments below.
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