There are always two sides to a story. A story cannot have a single narration. Even the simplest of stories can be seen from multiple perspectives. Cryptocurrency has seen both believers and complete skeptics. Steve Eisman, the man famously known for the ‘big short’ says:
“I don’t see the purpose of it. What value does cryptocurrency actually add? No one’s been able to answer that question for me.”
The Wall Street veteran who today is managing a portfolio at Neuberger Berman was one of a handful of hedge fund managers to predict the housing crisis. Now instead of capitalizing on the rising tide of digital currencies, he’s struggling to find purpose or value in the market, saying at a convention in Hong Kong that the rise of Bitcoin is being fueled only by speculation and fraud.
He’s joining the chorus of billionaire investor Warren Buffett, who has similarly railed against the cryptocurrency market. Meanwhile, Eisman has a history of agreeing with Buffett on topics like executive compensation.
Berman, however, does appear to keep tabs on cryptocurrency regulation, saying he ‘doesn’t understand’ why the market isn’t regulated ‘more heavily.’ The answer is that policymakers while eager to place controls on the market don’t want to craft laws that will stifle innovation in any given region. To quote former Fed Chairman Alan Greenspan, who Eisman once said was ‘the worst Chairman of the Fed in history’, it’s a conundrum that they’re working feverishly to solve.
Perhaps Eisman, whose career was a focal point in Michael Lewis’ bestseller ‘The Big Short’ and who was portrayed as a hedge fund manager by Steve Carell on the big screen, has been looking in the wrong place for the answers.
For instance, he presciently forecasts the US housing crisis following a $26 billion call on the mortgage market by Wachovia Corp a couple of years prior to the meltdown. He followed the signs, which led him to the famous ‘big short’. But when it comes to cryptocurrencies, Eisman admits he hasn’t taken the time to understand the mechanics of the market.
Eisman at the conference said,
“I don’t touch it. I don’t know what I’m looking at…I have no interest.”
He further added that he avoids investing in any currencies, not just the crypto kind.
Meanwhile, if you were to ask him where the next ‘big short’ was, Eisman wouldn’t point to cryptocurrencies and like the Bank of England’s Mark Carney sees no systemic risk in the global economy. And unlike JPMorgan’s Jamie Dimon, who similarly has no interest in bitcoin, Carney is not bracing for another US recession.
What he is most concerned about is the Canadian housing market, where there is evidence of a bubble that’s getting ready to burst. As a result, he’s taken short positions in more than half-a-dozen related stocks.
Majority of veterans in the financial sector side with the idea that cryptocurrency does not create any value whereas the new generation of investors seems to have a very optimistic belief towards the success of cryptocurrency.
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