Co-founder of the investment company GMO, Jeremy Grantham (Jeremy Grantham) is considered one of the most influential participants in the financial market. He predicted the dot-com bubble and the bubble on the US real estate market. Grantham recently published an appeal to investors in which he called bitcoin and, more interestingly, the entire stock market economic bubble that will burst in the period from 6 months to 2 years.
The bubble with the point of view of the Grantham
One of the sections of its report on market trends Grantham was devoted to the explanation of the rapid increase in the price of bitcoin.
«The lack of clearly defined intrinsic value and for the most part unregulated markets, coupled with a history-centric megalomania, makes bitcoin more than just (…) similar to the economic bubble,» writes Grantham.
He adds that «in 1999 and early 2000 years (each) had a classic leadership traits» indicating that the historical precedent could lead to «the collapse of (…) bubble.»
Throughout 2017, the bitcoin has shown rapid growth. At the beginning of the year, it was trading at just over $ 1,000, and in December the price reached a historical maximum of $ 20,000. Despite the fact that to date, the cost of bitcoin fell to $15 000, but this figure is in any case demonstrates the incredible growth of 1500%.
This rapid growth has led many financial analysts to believe that bitcoin has reached the status of an economic bubble. Just as many before him, Grantham has compared the bitcoin with the Tulip mania of the 17th century, as well as the «legendary bubble of the South seas» of 1719-1720.
Part of a wider trend
According to Grantham, the speculative growth of bitcoin coincided with the inflating of the stock market in General.
«On the one hand, I recognize that this is one of the most expensive markets in the history of the United States, he writes in his report, on the other hand, being an expert in big stock bubbles, I also recognize that now we are showing signs of entry into phase blow of this very long bull market».
Throughout the report Grantham cites examples of historic market crises, complementing their price charts.
«… perhaps we can see the first movement: the growing wrath of the bears… all the more optimistic mood of the press and coverage on television.»
The last paragraph of Grantham believes the most significant. As soon as the market will get the greater part of air time, «probably within a few months we’re below.»
«Good luck. It is necessary for all of us,» he says in conclusion.
Not everybody agrees
In 2017, as the cryptocurrency market were subdued institutional space, we have seen the introduction of futures on bitcoin and applications to open funds ETFs. All this time, did not stop talk about the economic bubble, however, bitcoin has continued to take new heights.
On the other hand, not all representatives of the financial world are of the opinion about the speculative nature of bitcoin. So, a senior strategist at investment company Charles Schwab, Jeffrey Kleintop (Jeffrey Kleintop), recently challenged comparison bitcoin gowith dotcom and property bubbles. Unlike the Grantham he believes that bitcoin evolving independently from the rest of the market. In addition, he is more optimistic about 2018.
And Kleintop not alone. This week, many media reported that venture capital company, Peter Thiel (Peter Thiel) Founders Fund owns bitcoins worth millions of dollars. Thiel believes bitcoin has a «great potential», particularly if cryptocurrency continues its journey to becoming «cyberactivists gold».
And yesterday and such a powerful enemy of bitcoin as the CEO of JP Morgan Chase, Jamie Dimon, was forced to admit that mistakenly called bitcoin a Scam. Now he believes that bitcoin «is not worth paying attention.»
Perhaps in 2018 we’ll see how and other whales of the financial world will change their attitude towards cryptocurrencies.