Summary List PlacementEthereum has earned its place as the cryptocurrency second to bitcoin, as it's the one with the second-largest market cap.
But the two don't always compete. Bitcoin is seen as a store of value, while ethereum's blockchain enables the development of smart contracts and various applications, which gives it wider use cases.
But ethereum's real competitor may be coming down the pipeline, according to Keith Bliss, the president of Capital2Market, a firm that provides technology solutions to the financial sector. Bliss told Insider he saw developers increasingly turning to polkadot, the ninth-largest cryptocurrency by market cap, to build their platforms.
Bliss' career has largely revolved around fintech since the late 1990s, when he sold trade-order-management systems to large buy-side asset managers. He then transitioned to electronic trading systems that connected institutional buy-side players with institutional sell-side players to transact equities for Wall Street.
He has witnessed the gradual development of fintech over the past two decades, which is why he's optimistic about the development of cryptocurrencies and the overall tokenization of assets. The latter refers to the process of converting some form of equity or asset into a token that can be moved and transferred on a blockchain.
Both ethereum and polkadot have transaction protocols that automatically execute, control, and document legally relevant events on their respective blockchains. But polkadot can bridge and interact with other blockchains, including ethereum. This means it doesn't need to have applications built right into its main blockchain, but it can have them connected by a bridge, Bliss said. And this makes polkadot a scalable multichain platform.
"So this is where you start to see the interoperability of blockchains around the world," Bliss said. "This is what polkadot is solving. One of the biggest problems is that, OK, how do the blockchains communicate with one another?"
Ethereum's open-source network and ease of use had developers flocking to its platform, which increased the number of applications using its blockchain, Bliss said. But every addition the network required needed to be coded right onto its blockchain.
As applications continue to build up, one concern is the network's ability to handle more transactions with speed, Bliss said.
Also, like any innovation, once it's out there in the marketplace for a few years, you start to see the problems it's not solving, and this is ethereum's current predicament, Bliss said. Gavin Wood, a cofounder of ethereum, created polkadot.
But Bliss said he didn't expect ethereum to be replaced because, like bitcoin, it's widely been embraced and adopted by the institutional community. And it will get upgrades along the way. But he does believe polkadot will both complement and compete with ethereum, he said.
Polkadot's fair price
Predicting polkadot's price action is a bit tougher than doing that for ethereum and bitcoin, Bliss said. Leading crypto-investment firms like Grayscale have built products around ethereum, such as its ethereum exchange-traded fund. Investors can also trade futures on both crypto assets, unlike polkadot, which was listed on Coinbase more recently, when Bliss himself bought a few shares, he said.
But it's reasonable to expect polkadot to return to its $48.68 record high. Polkadot could see this price point before the end of the year, Bliss said.
He added that this would depend on polkadot's ability to continue growing and adding parachains, which are the independent blockchains that connect to and run off its network. Additionally, it will need to keep attracting developers until it becomes the go-to for decentralized financial application protocol.
Based on these fundamentals, within three years, he said he didn't see a reason that it couldn't hit $100, which would be up 521% from where it was trading early Thursday.Join the conversation about this story » NOW WATCH: Sneaky ways Costco gets you to buy mor […]
Summary List PlacementCryptocurrency ads are coming soon to a platform near you.
Top crypto exchanges plan to spend millions on marketing in the coming months as they try to reach the mainstream, offering a welcome trickle of new revenue for ad agencies still recovering from the pandemic.
Crypto companies have mostly avoided traditional advertising, instead using PR to target investors and a community of enthusiasts on platforms like Reddit and Twitter.
But crypto companies have attracted $8.6 billion in funding so far this year, easily surpassing 2020's $3.4 billion total. Chief strategy officer Elizabeth Paul of The Martin Agency, which recently was hired by Coinbase, predicted at least one crypto brand would air a Super Bowl ad in the next two years.
US ad budgets for two of the biggest exchanges, Coinbase and eToro, shot up 57% and 230% to $16.3 million and $6.4 million last year, respectively, according to Kantar. And several top exchanges, including Coinbase, eToro, Crypto.com, Blockfolio, and Gemini, have hired or started looking for ad agencies in recent months, knowledgeable sources said.
Sina Nader, former Robinhood exec and current COO at FTX.US, said brands like his face a make-or-break moment as they try to stand out in a crowded field that includes publicly-traded companies like Coinbase and financial giants such as MasterCard, JPMorgan Chase, and MassMutual. FTX processes more than $10 billion in trades each day, but 99% of people outside the crypto community still haven't heard of it, Nader said.
"Everyone's racing to become the Kleenex of crypto," said Paul.
Some are trying to boost awareness through big, splashy deals. FTX paid $135 million for naming rights to the Miami Heat's American Airlines Arena and became the first official crypto sponsor of Major League Baseball. Blockfolio, which FTX acquired in 2020, signed a sponsorship contract with top NFL draft pick Trevor Lawrence.
Avinash Dabir, head of partnerships at Blockfolio, said the company would soon announce more global sports marketing deals as teams and leagues have grown more comfortable working with crypto companies.
Celebrities are another common theme among crypto brands. EToro has run campaigns starring Alec Baldwin and Kristian Nairn of HBO's "Game of Thrones." Top influencers like MrBeast, Charlie D'Amelio, and Logan Paul have endorsed currencies and exchanges, and Neil Patrick Harris just became Coinflip's new spokesman.
The crypto exchanges are still new to traditional advertising channels like broadcast TV.
But eToro head of digital marketing Brad Michelson said his company quickly moved beyond a focus on Twitter with viral bitcoin gifs to display and podcast ads, PR, and platforms that don't usually run fintech ads, like dating app Tinder. The company recently hired Vice-owned agency Virtue to create its next big campaign.
Exchanges face the challenges of setting themselves apart and convincing the public to give their products a chance. (For agencies, the risk is that these companies will spend big, then quickly pull back as their strategies shift.) And platforms like Facebook and YouTube still restrict ads for certain crypto products.
14% of Americans have invested in crypto and another 13% plan to do so over the next 12 months, according to an April Gemini poll. But a 2020 survey by PR firm Edelman found that 34% of respondents knew nothing about cryptocurrency, and only 26% believe it will have a positive impact on the world.
Paul said crypto companies will be tempted to define themselves as upstarts taking on the banking giants, but this strategy will lead to commoditization.
"For brands, this is the Wild West," she said. "It's not often in history that you're on the edge of a reorganization of the entire financial world."Join the conversation about this story » NOW WATCH: Sneaky ways Costco gets you to buy mor […]
Summary List PlacementTwitter and Square CEO Jack Dorsey said he would leave the helm of the two publicly-traded US companies to work on bitcoin if needed, speaking in an interview at the Bitcoin 2021 conference earlier this month.
He argued that bitcoin miners have a profit incentive to use green energy in their operations, which have come under fire for the huge amounts of electricity they can consume. He also said central-bank concerns and roadblocks to cryptocurrencies are just excuses to prevent losing power, speaking in an interview with the Human Rights Foundation's Alex Gladstein.
Here are Dorsey's 9 best quotes from the interview, lightly edited and condensed for clarity:
1. "If I were not at Square or Twitter, I'd be working on bitcoin. If it (bitcoin) needed more help than Square and Twitter, I'd leave them for bitcoin. But I believe both companies have a role to play, and I think anything that we can do as companies to help find the right intersection between a corporate narrative and a community open narrative is for the best." — on making bitcoin more accessible.
2. "Bitcoin changes absolutely everything, and what I'm drawn to the most about it is the ethos — what it represents, how conditions that created it are so rare and so special and so precious. And I don't think there's anything more important in my lifetime to work on, and I don't think there's anything more enabling for people around the world." — on bitcoin as a tool for protecting human rights, rather than just an investment.
3. "We don't need the banks anymore." — on billions of people around the world not having a bank account.
4. "That's why we don't deal with any other currencies or coins — because we're so focused on making bitcoin the native currency for the internet." — on financial payments provider Square's ambitions for bitcoin.
5. "What central banks are trying to do are just bumps in the road, and they're bulls---. We have a much better alternative in bitcoin. We have designs for that sort of privacy and that freedom within it. And the more we can — especially our governments — can realize that, and get in the boat sooner, the better off we all are." — on central banks developing their own digital currencies as a move away from paper money.
6. "It feels like there's probably something a little bit deeper when you're hearing any of these excuses. And it's just trying to understand what that really is, and I think it's really (about) losing power, effectively." — on government bodies and critics characterizing bitcoin as connected with criminal activity.
7. "It can't, and it never will." — on the chance of Wall Street controlling bitcoin.
8. "Ultimately, miners have to make a profit. And getting cheap renewable energy maximizes their potential for profit. It's really that simple, and I thought I had some agreement with some notable figures out there. Then that seemed to change over a matter of few weeks, and now it's in a weird kind of place. But I believe fully that bitcoin over time and today does incentivize more renewable energy." — on how bitcoin mining incentivizes use of renewable energy.
9. "Just that realization that we finally have a currency that can be traded to any single point on the planet is pretty incredible, and what that enables going forward is mind-blowing. And I'm going to do everything in my power to make sure that happens." — on the potential for bitcoin's widespread use.
Read More: A managing partner at a venture fund that's backed more than 30 billion-dollar blockchain projects compares the technology today to the dot-com boom of the 1990s — and breaks down 4 platform types and the cryptos leading each one into the futureJoin the conversation about this story » NOW WATCH: Where you should go to stay safe during an earthquak […]
Summary List PlacementNew York City Democratic mayoral front runner Eric Adams said he would turn the city into a bitcoin hub within a year, rivalling Miami for the position as the epicenter of the US crypto community.
"I promise you, in one year [...] you're going to see a different city. [...]. We're going to become the center of life science, the center of cyber security, the center of self-driving cars, drones, the center of bitcoin, we're going to be the center of all the technology," Adams said on Tuesday after voting closed for the primaries.
Adams is currently leading the race, while bitcoin fan Andrew Yang, who had also said he would transform the city into a bitcoin hub, dropped out of the race after polls placed him second in line.
New York's state assembly rejected a bill to limit crypto mining for environmental reasons earlier this month. It had passed through the state senate after Senator Kevin Parker had proposed the state halt bitcoin mining for three years until its environmental impact, especially its greenhouse gas emissions, could be evaluated.
Should Adams be elected and make good on his promise to turn New York City into a bitcoin hub, the city would rival Miami as the focal point of the crypto community in the US.
Miami has been dominating the scene over the past months, as its mayor Francis Suarez has advocated for bitcoin adoption and has said he was trying to make Miami into the world's crypto capital.
Earlier this month, thousands of crypto fans congregated in the city to attend the Bitcoin 2021 Miami and Shitcoin 2021 conferences despite the ongoing Covid-19 pandemic. Bitcoin 2021 is the biggest annual crypto convention and saw guests like Jack Dorsey, Michael Saylor and the Winklevoss twins attend.
El Salvador's President also used the conference to announce a bill that would make bitcoin legal tender in the Central American country - which he successfully pushed through congress the following week.
"Miami, you had your run, we're bringing our businesses back!" Adams said on Tuesday. Join the conversation about this story » NOW WATCH: Why scorpion venom is the most expensive liquid in the world […]
Summary List PlacementCryptocurrencies are more than just a way to make a quick profit for a growing number of millennials who are looking to add the likes of bitcoin to their retirement portfolios, so they can continue to reap the benefits of this asset class long after today's meme-like hype has faded.
"We're not selling bitcoin through retirement accounts, we're selling retirement accounts to bitcoiners," Ryan Radloff, chief executive office of Kingdom Trust, told Insider. Radloff, who helped found Coinshares, one of the world's largest digital asset managers, said he saw a gap in the market for the 7.1 million bitcoin owners.
"My co-founders who started CoinShares over in Europe, we understand exactly where our market is ... So effectively, I think a lot of it is just telling them that "Guys, hey, I've been with you since 2012 before bitcoin was a hundred dollars. Guess what? There's a tax-efficient way of doing this, that isn't Grayscale now. Now, you can literally hold your own keys in a retirement account."
Even though bitcoin is one of the best performing assets of the last year, with a gain of almost 300%, its luster has faded lately. Concern about the environmental impact of the mining process, along with growing regulatory scrutiny saw bitcoin drop below $30,000 at one point this week, effectively wiping out all its year-to-date gains.
However, younger investors are willing to live with its volatility. Radloff's thirst for bitcoin and digital assets certainly remains unquenched. He is now at the helm of Kingdom Trust, which oversees more than 120,000 retirement accounts and has $18 billion in assets under management.
He co-created the Choice app to address the need for greater diversification in the $34.6 trillion US retirement market. There are a few types of retirement accounts, such as individual retirement accounts (IRAs) and 401(k)s (group pensions that come from your employer). IRAs can be self-directed, called SDIRAs, which will allow users to include bitcoin as part of a wider asset allocation strategy.
The average Choice user opens a retirement account with about $85,000 and is in their mid 30s and early 40s, Radloff said. In just one year, he added that clients' appetite for bitcoin and other digital assets doubled to over $2 billion. "Our average Choice account is about $220,000. So of that, about 65% of those assets are in digital assets, actually," he said. "So, they usually don't start that way. It usually starts around 10 to 25%."
Bitcoin in retirement
As tantalizing as it may be to aggressively pursue bitcoin as a retirement growth strategy option, market analysts advise caution.
"Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors' money," the UK's Financial Conduct Authority said in January. "If consumers invest in these types of products, they should be prepared to lose all their money."
Retail investment advisers also suggest exercising caution.
"Until there's a real direction of travel in terms of digital payments and digital currencies, [in addition to] a framework setup and [crypto is] brought more into the regulatory sphere, there will be a concern in investing in them," Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said.
She added that as China cracks down on crypto assets and central banks consider adopting their own digital currencies, such as stablecoins, it could be premature to buy crypto as you may not be able to easily cash them in when your retirement age nears.
She also had specific advice on how to protect yourself:
Before considering managing your own pension pot, build up 3 to 6 months of essential expenditure reserves
If you are considering adding crypto assets to your pension plan, ensure it remains less than 5% of a highly diversified portfolio.
If you are closer to retirement, then create a portfolio that is more heavily weighted in stable investments classes or tracker funds.
Join the conversation about this story » NOW WATCH: How the 1999 Russian apartment bombings led to Putin's rise to power […]
Summary List PlacementFamed investor Kevin O'Leary called bitcoin the "granddaddy" of digital assets and explained why he thinks governments will be unable to ban cryptocurrencies, speaking in a "Bitcoin Magazine" podcast with hosts David Zell and Matt Odell on Tuesday.
The "Shark Tank" co-host, who is a major shareholder in a new DeFi investing company, also spoke about bitcoin's move to becoming ESG-friendly and what the tipping point for institutional adoption will be — and how that could help its price eventually skyrocket.
Here are 10 highlights from O'Leary's interview, lightly edited and condensed for clarity:
1. "I'm never going to sell it, I'm not going to trade it. I'm going to own it, and I anticipate it will appreciate over time and probably beat the S&P 500 index." — on considering bitcoin as property, not currency.
2. "I'm not going to try and trade in and out of price adjustments. I'm going to allocate 3% — and if the price drops, I'll buy more. That's the whole point." — on bitcoin's volatility being problematic for institutional investors.
3. "The institutional investor is not on board yet. But my thesis is: when we resolve the issues around bitcoin right now in the next couple of years, and allocation starts happening from sovereign funds and pension plans, you're gonna see a material appreciation in price." — on value appreciation over time.
4. "The most desirable asset in crypto is bitcoin — it is the gold standard of crypto." — on institutions considering allocations to cryptocurrencies.
5. "I don't see a situation where it's going to be made illegal anywhere, and the thesis is the genie's out of the bottle. Bitcoin is distributed all around the world and used as property, and currency, in every country on Earth. And so, I don't really see, even if one country says they're going to make it illegal, how they're exactly going to do that." — on bitcoin being regulated by governments.
6. "Regulating it out of existence is a low probability as far as I'm concerned. Not going to happen. In fact, it's going the other way." — on regulators having to deal with bitcoin's use.
7. "The world is going to move towards digital currency. Bitcoin was the beginning of that, it is the granddaddy of it all, which is why it's so desirable." — on the inevitability of digital currencies being the future.
8. "I have had many discussions with some of the larger players in bitcoin in terms of ownership and assets. And the reason we have a collective interest in it is that we see the logjam being broken up, and then institutions coming into an asset class we already are positioned it — that's a very attractive outcome." — on being involved in bitcoin's move to becoming ESG-friendly.
9. "I'm looking at increasing my allocation. Next stop will be 5% on bitcoin (from 3%) and at the same time investing in infrastructure so that I can actually do the same thing that anybody else wants to. I would like to actually make yield off my coin, and that involves getting a platform that allows me to do that easily, compliantly with tax reporting." — on his investment in institutional tax-compliant platforms for bitcoin that are just starting up.
10. "Bitcoin is volatile. There's no question about it. But I think everyday we move towards more adoption at the institutional level. But there's going to be the proverbial tipping point when all of a sudden one or two or three large institutions do an allocation, and you're going to see the price of bitcoin skyrocket." — on the digital asset overcoming ESG hurdles.
Read More: A managing partner at a venture fund that's backed more than 30 billion-dollar blockchain projects compares the technology today to the dot-com boom of the 1990s — and breaks down 4 platform types and the cryptos leading each one into the futureJoin the conversation about this story » NOW WATCH: Why scorpion venom is the most expensive liquid in the world […]
Summary List PlacementTwo South African brothers recently vanished with $3.6 billion worth of bitcoin in what could potentially be the biggest cryptocurrency heist in history.
Local media, including Independent Online and ITWeb, were the first to report on the case.
In 2019, Ameer Cajee and his younger brother, Raees Cajee, founded crypto investment app Africrypt.
Not long after, the siblings, along with 69,000 bitcoins worth roughly $4 billion at their April peak, are nowhere to be found.
It all began in April when Ameer, who is the company's chief operating officer, informed their clients that Africrypt was hacked, compromising their accounts, wallets, and nodes.
In an unusual step, 20-year-old Ameer told them not to report the incident to authorities as this would impede attempts to recover the funds.
A few suspicious customers, however, did report the hack. They contacted Hanekom Attorneys, according to Independent Online, who then tried to track the brothers down. When unsuccessful, Hawks, a police unit in South Africa that targets crime and corruption, was looped in.
"We were immediately suspicious as the announcement implored investors not to take legal action," Hanekom Attorneys told Bloomberg over email. "Africrypt employees lost access to the back-end platforms seven days before the alleged hack."
The lawyers also told cryptocurrency exchanges around the world to sound an alarm if they noticed any suspicious conversion of coins.
FNB, which banked Africrypt, has also been questioned about the episode, according to documents seen by Independent Online. The local bank denied any involvement.
"FNB once again confirms that it does not have a banking relationship with Africrypt. Due to client confidentiality, FNB cannot provide any information on specific bank accounts," Nadiah Maharaj, FNB risk spokesperson, told Independent Online.
As the brothers remain missing, some efforts to get to the bottom of things have hit roadblocks.
For instance, South Africa's Finance Sector Conduct Authority, the country's financial institutions regulator, said cryptocurrency-related matters do not fall under its jurisdiction, Independent Online reported.
Crimes involving crypto are a growing cause of concern for regulators and companies.
Most recently, the Bank for International Settlement criticized the digital asset for its role in illegal activities.
"By now, it is clear that cryptocurrencies are speculative assets rather than money, and in many cases are used to facilitate money laundering, ransomware attacks, and other financial crimes" BIS said.
US Treasury Secretary Janet Yellen, meanwhile, has also been a vocal critic of cryptocurrencies.
"To the extent it is used, I fear it's often for illicit finance," she said in February. "I do worry about potential losses that investors can suffer."Join the conversation about this story » NOW WATCH: Why I'm throwing away every plastic thing in my kitchen ASAP […]
Summary List PlacementFTX is partnering with Major League Baseball to become the first cryptocurrency exchange sponsor in professional sports.
The partnership establishes FTX as the official cryptocurrency exchange brand of the baseball organization.
The latest initiative aims to increase brand awareness for FTX and to continue brand innovation for MLB. As part of the contract, FTX will be able to exercise worldwide marketing rights associated with MLB logos.
"It's an honor for FTX to be the first cryptocurrency exchange to be associated with the history and tradition of America's national pastime," Sam Bankman-Fried, FTX founder and CEO, said in a statement Wednesday.
The financial terms of the partnership were not disclosed.
In addition, FTX.US, a US-regulated cryptocurrency exchange, will become MLB's first-ever umpire uniform patch partner starting on July 13.
This isn't the first time 29-year-old Bankman-Fried dipped his toe into sports.
Under his leadership, Blockfolio, the cryptocurrency app that FTX acquired in 2020, won naming rights to the NBA's Miami Heat arena until 2040.
The $135-million deal, inked earlier this year, overtook American Airlines as the leading sponsor for the Florida sports team.
Join the conversation about this story » NOW WATCH: Why I'm throwing away every plastic thing in my kitchen ASAP […]
Summary List PlacementEl Salvador's president, Nayib Bukele, said in a recent interview that he hopes introducing bitcoin into its economy will be the catalyst for its shift from a Third World country to becoming an industrialized, advanced nation.
Bukule defended the small Central American nation's decision to adopt the cryptocurrency as legal tender in his discussion with the "What Bitcoin Did" podcast host, Peter McCormack, after critics warned the move could collapse the country's economy.
Here are his 9 best quotes from the interview, lightly edited and condensed for clarity:
1. "I think bitcoin as legal tender, even though nobody has done it before, it was a no-brainer." — on being the first country to make the move.
2. "Bitcoin is an open and free system. So, they don't have to trust us. They have to trust the system, and we trust the system." — on anyone skeptical about the use of cryptocurrency as legal tender.
3. "My dream would be that El Salvador will transit its way from the Third World to the First World. It's probably not going to be done in a couple of years but, you know, probably at least we can set up the path." — on the potential impact of introducing bitcoin to El Salvador's economy.
4. "I don't think they want to understand. Because all of their preconceptions, their theses, their work, their books, their prices will be meaningless, because they were wrong. I don't think they're against bitcoin. I think they're more trying to defend their personal stories." — on classical economists rejecting bitcoin and its prospects.
5. "Having the World Bank advisors or technical support would have been nice, but we really don't need it. The talent that is here, working, is way more than enough." — on the World Bank rejecting El Salvador's request for support in making bitcoin a legal tender.
6. "This is just exercising our sovereign right to adopt legal tenders. Like we adopted the US dollar in the year 2001. What's the difference? The only difference probably is the reason why we're doing this. In 2001, it was probably done for the benefit of the banks. And this decision is done for the benefit of the people." — on why the country isn't going to get into a fight with the World Bank.
7. "We're going to prove ourselves that we can work fast. We have a lot of support and a lot of talent from people that just love this project, and they're working their asses off, just because they love it." — on whether El Salvador will be ready when its bitcoin law comes into effect in September.
8. "It's not going to be only good for the monetary system, or for the currency, or for remittances and for economic inclusion, and for banking services like lending. It's not only going to be good for the bitcoiners in tourism and investing in jobs, but also for energy and income to do social projects like schools or roads and bridges that without this law, they wouldn't have that." — on the expected benefits of incorporating bitcoin and its technology into the economy.
9. "The bitcoin system is so perfect that I think it's gonna be the future. It is the present already in a lot of things, but it's gonna be way bigger in the future." — on the potential for a wave of government adoption of bitcoin.
Read More: 'Wolf of All Streets' crypto trader Scott Melker breaks down the red-hot crypto corner of yield farming — and shares 4 of his favorite DeFi tokensJoin the conversation about this story » NOW WATCH: Sneaky ways Costco gets you to buy mor […]
Summary List PlacementThe Middle East has joined the crypto craze.
On Wednesday, a Canadian bitcoin fund listed on the Nasdaq Dubai exchange. The Bitcoin Fund — which was the first of its kind to be listed on a major exchange last year according to Bloomberg — is the first digital asset-based fund to list in the Middle East and North Africa.
The listing "reinforces the city's position as a driving force for capital market transformation," Nasdaq Dubai said in a press release.
Canada's largest digital-asset investment fund manager 3iQ Corp., which has C$2.5 billion in assets under management, listed the fund. According to its prospectus, the Bitcoin Fund invests in long-term holdings of the cryptocurrency as a "safer alternative to a direct investment in bitcoin." 3iQ Corp. and the Nasdaq Dubai did not immediately respond to Insider's request for comment.
The fund, which listed as QBTC, has risen 10.4% since yesterday to $38.30, according to data from the Nasdaq Dubai.
Bitcoin rebounded Wednesday to more than $34,000 after wiping out all its gains for the year the day prior. The cryptocurrency was trading above $60,000 just two months ago. But has faced volatility as China has cracked down on cryptocurrencies, and others, including Tesla's Elon Musk, have flagged environmental problems with bitcoin mining. Join the conversation about this story » NOW WATCH: Why I'm throwing away every plastic thing in my kitchen ASAP […]
Summary List PlacementJeremy Grantham said bitcoin is the asset that most resembles the Nasdaq during the 2000 dot-com bubble, according to an interview with Bloomberg.
"Cryptocurrencies total over $1 trillion of claims on real global assets while adding nothing to the GDP pool — pure dilution," Grantham said.
The market historian said bitcoin should be avoided in portfolios and does not serve as a viable hedge to a traditional 60/40 stock & bond portfolio, according to the interview.
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A wide-ranging Bloomberg interview with market historian Jeremy Grantham on Tuesday revealed his view that bitcoin is in a bubble similar to the dot-com frenzy of the early 2000s.
Grantham opined on the 50% decline in bitcoin over the past two months and likened it to the fast and furious drop of the Nasdaq 100 during the unraveling of the dot-com bubble in 2000.
"Probably the asset that most resembles the Nasdaq in 2000 is bitcoin, and it has been cut in half over the last several weeks. In 2000, the Nasdaq crashing 50% was a perfect warning shot for the broad market six months in advance," Grantham said, alluding to the idea that the recent decline in bitcoin could signal an upcoming decline in the broader stock market.
While he says bitcoin is in a bubble, Grantham also doesn't view the popular cryptocurrency as a viable hedge to traditional stock and bond portfolios. Many crypto bulls have praised bitcoin's lack of correlation to other asset classes as reason why investors should include an allocation to it in their portfolios.
But according to Grantham, "bitcoin should be avoided" as it's not a viable hedge. The same goes for dogecoin and other cryptocurrencies that were created as a joke.
"Dogecoin was created as a joke to make fun of cryptocurrencies being worthless, and not only has it taken off, but it's such a success that second-level joke cryptocurrencies making fun of dogecoin have gone to multibillion-dollar valuations. Meanwhile, other cryptocurrencies have seen success purely on the basis of their scatological names," Grantham said.
"Cryptocurrencies total over $1 trillion of claims on real global assets while adding nothing to the GDP pool — pure dilution," Grantham added.
Grantham doesn't think bitcoin is the only bubble out there. In the interview, he detailed why he thinks the stock market is in a bubble following the swift pandemic recovery, and outlined when and how he'd begin buying stocks again. Join the conversation about this story » NOW WATCH: Where you should go to stay safe during an earthquak […]
Summary List PlacementBitcoin staged a rebound Wednesday, just a day after wiping out all its gains for 2021.
The world's largest cryptocurrency climbed as much as 6% to $34,821.53. Prior to the climb, bitcoin had fallen as much as 30% since reaching a multiweek high on June 15.
That included a tumble on Tuesday that took bitcoin below a key technical support level of $30,000. The cryptocurrency's low of $28,824.32 on Tuesday actually took it below the $28,996.28 level where it started in 2021.
Bitcoin's latest sell-off was driven by a crackdown from China focused on reducing mining activity and ensuring domestic banks don't transact it.
"We expect bitcoin to hold the $30,000 to $42,000 trading range for now and test it a few more times before making any decisive move in either direction," Pankaj Balani, CEO at Delta exchange, a crypto derivatives exchange, said in a statement.
Balani and John Wu, president of Ava Labs, the team behind altcoin Avalanche, both noted the recent sell-off was distinct from the massive cryptocurrency crash in May led by bitcoin.
"It's not a deleveraging sell-off nor a euphoric sell-off," Wu told Insider. "It's just a lack of interest."
Alexandra Clark, sales trader at digital asset broker GlobalBlock, isn't too concerned about the recent slide. She pointed to the $2.5 billion worth of options and another $2 billion in futures contracts that are set to expire on June 25 as possible triggers for recent price swings.
"Historically, the bitcoin option expiries have led to increased volatility, so given how things have been moving recently, this month is likely to be no different," she said.
Read more: A managing partner at a venture fund that's backed more than 30 billion-dollar blockchain projects compares the technology today to the dot-com boom of the 1990s — and breaks down 4 platform types and the cryptos leading each one into the futureJoin the conversation about this story » NOW WATCH: Why scorpion venom is the most expensive liquid in the world […]