Joe Davis; Vanguard economist believes that Bitcoin price (BTC) will crash to zero, and it will never emerge as reliable currency.
Bitcoin price remains range-bound after falling 15% from three months high of $9,900 level. The bearish trend has been receiving support from influential icons. The debate over the use of Bitcoin as a medium of exchange is also contributing to the sell-off.
Bitcoin price trades around the $8,300 level today. Altcoins are in the red after a short rally at the beginning of the week. The total cryptocurrency market hovers in the range of $380 billion, down from $465 billion it hit a few days ago.
Joe Davis, the chief economist for $5.1 trillion asset management firm Vanguard, thinks cryptocurrencies aren’t the alternative of fiat currency. His stance is similar to PayPal CFO and Warren Buffet – who already has rejected the possibility of using Bitcoin as the medium of exchange.
Why Does Joe Davis Predict that Bitcoin will Crash to Zero?
The economist of the $5.1 trillion asset management firm warned investors that Bitcoin price is likely to crash to zero. He suggested investors keep their focus towards “tried and true asset classes”. He believes that allocating even a small portion of the investment portfolio to cryptocurrencies could turn out to be a big mistake.
He said, “The investment case for cryptocurrencies is weak. Unlike stocks and bonds, currencies generate no cash flows such as interest payments or dividends that can explain their prices. National currencies derive their prices from the underlying economic activity of the countries that issue them. “
The economist further argued that cryptocurrencies could be used as a medium of exchange, but they don’t have a store of value.
Market Reaction was Strong Against Joe Davis’ Argument
Although the majority of market participants believe the higher level of volatility in cryptocurrency prices makes it harder for the global community to use it as a medium of exchange, they think the market needs some time and more regulation clarity for complete stabilization.
Twitter users reacted strongly against Joe Davis arguments. Cryptocurrency followers are comparing Bitcoin and other virtual currencies with the early age of internet and the Dow Jones.
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