Legendary Lebanese-American mathematician Nassim Nicholas Taleb, author of “The Black Swan,” advised those who still view Bitcoin as a hedge against world events to give up on investing and venture into other hobbies like stamp collecting, bird watching or something less risky.
Bitcoin dived to $53,524 on the Bitstamp exchange on Nov. 26, the lowest since early October, due to the increasing panic over the omicron coronavirus variant.
At the beginning of the pandemic, Bitcoin infamously halved in value on March 13, 2020, with critics ridiculing the “safe haven” status some analysts had attached to it. The world’s largest cryptocurrency managed to pull off an impressive recovery that many believe was boosted by massive quantitative easing.
In a tweet posted on Nov. 26, Taleb, a one-time admirer-turned-detractor of Bitcoin, said this proves that crypto could not act as a hedge against systemic risk because it had corrected more than the stock market.
In April, Taleb told MSNBC that Bitcoin is not a safe hedge against inflation and it’s too volatile to be an effective currency. He compared Bitcoin to a Ponzi scheme and said there is no connection between inflation and Bitcoin.
Taleb told CNBC that before he became a Bitcoin critic, he was also “fooled by it initially,” thinking it could evolve into a currency used in transactions.
“I bought into it…not willing to have a capital appreciation, so much as wanting to have an alternative to the fiat currency issued by central banks: A currency without a government,” he said.
It is not just critics like Taleb, but even some of the biggest Bitcoin proponents and regulators who do not view the top cryptocurrency as a hedge just yet.
U.S. secretary Janet Yellen said in February that Bitcoin coin is an extremely inefficient way of conducting transactions, since often it is used for illicit finance, adding that people should beware of the fact that it is highly speculative.
Mati Greenspan, the founder and CEO of Israel-based Quantum Economics, said in August that Bitcoin was “absolutely not” a hedge against inflation. “It is a liferaft for many people out there who are scared of monetary debasement.”
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?