Howard Mark: Cryptocurrencies Are Not Real Currencies

The impact left by Bitcoin is undeniable considering how it shook the finance world. Bitcoin almost reached $20,000 at some point in 2017 only to fall as low as 70{4ede17fdd9b4ce8121d01fc4b54913fe84f8215aace504cc657695cefb5329ff} from its peak. And this has led to questions regarding the crypto industry as well. Many regulators have jumped on board in order to prevent the Wild West scenario in the industry making sure that they can protect investors and prevent illicit activities.

Bitcoin along with other cryptocurrencies have found prominent personalities in favor of the crypto and those against it. Recently, Billionaire investor Howard Marks said a negative view regarding Bitcoin. He is doubting the future of the cryptocurrency during the eight annual CNBC and Institutional and Investor Delivering Alpha conference held in New York. He said that “It’s not an investment…it’s a trade”. He also said that “In the long run, I think it will be shown not to have any substance”.

As for the reason why a lot of people have bought Bitcoin, he said that people are only buying “because they think someone will buy it from them at a higher price”. Mark added that “not because they can specify its intrinsic benefits. Not because they can judge the intrinsic value. But only because they think it’s going up”.

This isn’t surprising. Bill Gates and Warren Buffet expressed the same opinion regarding cryptocurrencies.

Greater Fool Theory

Howard Mark’s Oaktree Capital has $121 billion in assets under its management as of March. As for the net worth of the billionaire, Howard Mark has a net worth of $2 billion. He believes that the thing that he sees in Bitcoin is what is called “the greater fool theory”.

Though the US Securities and Exchange Commission has considered both Bitcoin and Ethereum not as securities, it is worth mentioning that Ripple and other cryptocurrencies are still not cleared. And also, you have the fact that there are too many cryptocurrencies today that are no longer used.

The head of the US Federal Reserve, Jerome Powell, warned that Bitcoin and other cryptocurrencies are quite dangerous for those who he called “unsophisticated investors”. He said that “relatively unsophisticated investors see the asset go up in price, and they think: ‘This is great; I’ll buy this’. In fact, there is no promise of that”.

He mentioned that “there are investors and consumer protection issues as well”. He believes that cryptocurrencies shouldn’t be considered real currencies since these don’t have intrinsic value.

There is also Raphael Bostic, who works as the president of the Federal Reserve Bank of Atlanta. He has expressed similar views on Bitcoin saying that cryptocurrencies “are not currency”.

Positive Opinion on Cryptos

There are many who are quite bullish on Bitcoin. That is despite the fact that it has lost a significant amount of its value. You have the likes of Tom Lee who believes that it is a matter of time before institutional investors are going to become interested in the niche. Strict regulations are even seen as a positive development in the niche. But do cryptos really have no value at all? Or institutional investors are seeing something that critics aren’t seeing?