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‘Decent Probability’ Bitcoin Price Goes to Zero: Vanguard Economist | CCN

An economist at one of the world’s largest asset managers believes there is a “decent probability” that the bitcoin price will eventually crash to zero.

Joe Davis, the chief economist for $5.1 trillion asset manager Vanguard, wrote in an ETF.com op-ed that although the firm is enthusiastic about blockchain technology in general, it does not believe cryptocurrencies constitute a viable use case.”

“I’m enthusiastic about the blockchain technology that makes bitcoin possible. In fact, Vanguard is using such technology. As for bitcoin the currency? I see a decent probability that its price goes to zero.”

Davis argued that bitcoin should not be classified as money, because although it could qualify as a unit of account and medium of exchange it is not an effective store of value. Moreover, he said that its current valuation is based purely on speculation rather than economic fundamentals.

He wrote:

“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. Cryptocurrency prices, on the other hand, are generally not based on economic fundamentals. To date, their prices have depended more on speculation about their eventual adoption and use.”

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‘Decent Probability’ Bitcoin Price Goes to Zero: Vanguard Economist.

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