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With crypto bulls and bears galore, who should you trust?

6 min reading

Bitcoin price were recently released and the price was higher than expected, economists seems to be  concerned about the sudden rise and the uncertainties that the future holds.  

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As crypto enthusiasts' passion for digital assets grows, so does the ridicule of crypto critics.

When the publicly traded fund Bitcoin price were recently debuted in the United States and the price of the world's largest cryptocurrency soared by more than $65,000, a world-renowned economist and leading bond manager stepped up to social media and the airwaves to address his digital asset concerns.

  • In the first case, economist Nassim Nicholas Taleb compares the rise of Bitcoin value to the 17th century Dutch tulip balloon. For those unfamiliar with it, 17th-century Holland raved about unusual and rare tulip varieties and paid exorbitant prices for some before the bubble burst and the market collapsed. Taleb suggested that the same could happen with cryptocurrencies.
  • In the second case, Scott Minerd, chief investment officer at Guggenheim Global, labeled most cryptocurrencies as “junk” and said most digital tokens would either disappear or end in disaster, as the dot-com sector did, as the bubble of the 90s decade finally burst.
  • To me, these two criticisms seem to be the same argument with two different outcomes: Cryptocurrencies are in a bubble. Taleb believes collapse is inevitable and that tokens cannot be recovered, while Minerd believes that most tokens will end up in the dustbin of history, but that some coins – especially Bitcoin – will survive. Time will tell if any of the pundits get it right, but I find it hard to imagine that the multi-trillion-dollar asset class and the influential technology behind it just disappear when the valuation bubble bursts.

Enthusiasm and skeptics take sides

After the advent of Bitcoin, crypto skeptics and enthusiasts gathered to share their views on the long-term prospects for the digital asset market.

The fan land includes the likes of billionaire, Galaxy Digital founder Mike Novogratz and the Winklevoss twins, founders of Gemini Exchange, but these guys definitely have skin in the game. Even more interesting is the enthusiasm coming from the likes of renowned financial advisor Rick Edelman and Tesla founder Elon Musk, because they are not “local” crypto and draw energy and attention to digital assets from other industries. Meanwhile, skeptics include the legendary Berkshire Hathaway tandem of Warren Buffett and Charlie Munger, economist Paul Krugman, Dallas Mavericks owner Mark Cuban and iconic financial advisors Peter Maluck and Michael Keats. And another skeptic who speaks of a financial icon is Carl Icahn.

Even more interesting is the latest series of crypto converters - people who were initially skeptical but have changed their minds about digital assets. These include economic historian Niall Ferguson, journalist Kevin Roose and many Wall Street legends such as Ray Dalio, Stanley Drakenmiller and Paul Tudor Jones. Skeptics, including Taleb and Minerd, believe that first, public envy over digital assets will eventually subside, and second, the instability of assets like Bitcoin will help accelerate their demise. This may be a shortsighted view as it focuses on the use of digital assets as an investment only. It's like viewing the stock market as merely a mechanism to register public opinion about the name and ticker of the company itself which is completely agnostic about important earnings, cash flow and growth.

Beyond digital assets only as an investment

Steve Larson, founder of PlannerDao, a digital asset and infrastructure resource for financial advisors and the Certified Digital Asset Advisory label (CDAA), says many advisors are misfocused on viewing and understanding digital assets. Larsen is a former advisor and accountant to Edward Jones who founded the CDAA as a decentralized autonomous organization (DAO). Unlike the CFP Board (Council of Certified Financial Planners Standards) and the Investment and Wealth Institute, which are the central regulatory bodies that administer certification, the CDAA is led by advisors who vote as a community on requirements and guidelines.

"Digital assets will revolutionize not only investment, but the economy," said Larsen. “The first step is to understand crypto business and other digital assets as an asset class and how they fit into a portfolio. The second step, which comes much sooner than most people realize, is that cryptocurrencies are also a delivery system that, to some degree, will forever change the way we access financial products and services. The first place that has come to light is the emergence of decentralized savings and payments platforms that will extend to investment accounts and the financial and technology infrastructure that advisors rely on to work on behalf of their clients, Larsen said.

Technology in transition and public discourse

The first wave of blockchain technology changes is aimed at banks and the next wave is aimed at traditional brokers and trustees. Because digital assets are designed as assets that can be held by investors, Larsen argues that core technology could one day render brokers and trustees obsolete and could be replaced by algorithms that work at little or no cost to the advisor or end-investor.

“The board is a product that will never go out of style; It was a service that was always needed, but the product distribution system that we have traditionally had to deal with is disappearing,” he said. "Digital assets will remove many of the intermediary levels traditionally used to invest clients' money and they will really be gone, not front-end planners."

Until that change, however, public discourse about cryptocurrencies will continue to outweigh their utility as an asset class to invest in, Larsen said, meaning we will have to live with the pressure between skeptics and enthusiasts, bulls and bears. "There's a reason we're all trying to get past each mid-term because it's going to be a while before people can clearly see the useful digital assets they're bringing into their everyday lives," Larsen said.

“It's like the internet. It all makes sense conceptually, but doesn't really come together until people see the difference in their lives. This is what keeps digital assets from the real boom that many of us have been waiting for, and part of that explosion can't happen until independent advisors believe they can get their clients into crypto business in a safe and legal way.

 

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The new DEFI platform enters the market! Earn passively - token sale 0.25 $

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