George Soros, the billionaire investor, spoke in January at the World Economic Forum in Davos said that he had a good point on blockchain technology but he was uncertain about cryptocurrencies, called them a bubble.
“Cryptocurrency is a misnomer and is a typical bubble, which is always based on some kind of misunderstanding.Bitcoin is not a currency because a currency is supposed to be a stable store of value and the currency that can fluctuate 25% in a day can’t be used for instance to pay wages because wages drop by 25% in a day. It’s a speculation. Based on a misunderstanding” said Soros.
By the way, Soros has already been indirectly betting on crypto. The firm accumulated a stake in Overstock.com in the fourth quarter, making it the third-biggest shareholder of the discount e-commerce company.
Last year, in August, it became the first major retailer to accept cryptocurrencies. Furthermore, the company had also planned to start an exchange for digital currencies as well as offer digital coins that could trade on the platform. In March, Overstock.com stated that the Securities and Exchange Commission is investigating its proposed ICO(Initial Coin Offering). Shares have sunk about 40% in the wake of the disclosure.
Today, things have totally changed. Indeed, George Soros wants to star trading cryptocurrencies. Not by himself, anyway.
Adam Fisher, who supervises Soro’s Fund Management’s macro investing operation, got the task to trade virtual coins thanks to an internal approval.Fisher had not yet begun trading cryptocurrencies through the $26 billion asset manager and he is still weighing his options.
As mentioned above, George Soros said digital coins cannot operate as actual currencies because of their volatility risk. Since he made his comment, Bitcoin has fallen 41%. Clearly, without a solid support we see an increase of distrust in crypto. But we know the remarkable potential of cryptocurrencies.
So though he denigrated Bitcoin as a bubble, he also argued that crypto would not have a “very sharp break” as most asset bubbles do:
“Normally when you have a parabolic curve, eventually it has a very sharp break,” Soros said. “But in this case, as long as you have dictatorships on the rise you will have a different ending, because the rulers in those countries will turn to Bitcoin to build a nest egg abroad.”