Credit Suisse CEO warns that Bitcoin is a Bubble
The latest surges in digital currency prices have attracted the comments of numerous governments, organizations and financial institutions, many of which have decided to issue warnings, rather than be supportive of crypto adoption. One of the latest examples in this direction consists of the comments made by the Credit Suisse CEO and the Allianz Chief Economic Advisor.
At a press conference held recently, the Credit Suisse CEO, Tidjane Thiam warned that: "From what we can identify, the only reason today to buy or sell bitcoin is to make money, which is the very definition of speculation and the very definition of a bubble."
Not only this, but he also talked about the potential criminal use associated with bitcoin and other digital currencies, by commenting that banks don’t really want to get involved with a currency that has anti money-laundering challenges. Other public figures such as billionaire Warren Buffett also warned that bitcoin could very-well be a bubble.
From a traditional point of view, they are correct. A big increase in the pricing of any good without an actual, physical value to be based on, can be regarded to as a bubble. However, it is essential to not forget the fact that digital currencies are based on a completely different system when compared to what the financial market has been accustomed with so far. Bitcoin isn’t backed by actual, touchable value, yet it is backed by the huge market demand, its potential and the capital being actively invested by people throughout the world. To many economic analysts who are optimistic about Bitcoin’s future, this is enough evidence. After all, it’s basic economic law here: if the demand rises, yet the offer remains low, prices increase. This doesn’t turn bitcoin into a bubble about to burst and decrease in terms of its value.
The Allianz Chief Economic Advisor did not warn that bitcoin is a bubble, yet he stated that volatility and instability on the market doesn’t make it a currency, but rather a commodity. However, volatility in the world of bitcoin no longer means having prices decrease considerably, but rather having them increase, as the value continues to stabilize according to the factors mentioned above.