Former White House Budget Director: Bitcoin Futures Contracts Don’t Add Legitimacy
Many of the negative crypto forecasts have come from skeptics who are not convinced by bitcoin’s wild run since the second half of 2017.
In a recent conversation with the CNBC, former White House budget director David Stockman said that bitcoin prices would experience a spectacular crash sooner or later, teaching “really stupid” cryptocurrency investors a lesson on how financial markets function.
He categorically stated that as fascinating as the rise of bitcoin bubble may seem, its fall is likely to be far more meteoric.
Speaking of the optimism most bitcoin investors share, Stockman said, “It’s basically a class of really stupid speculators who have convinced themselves that trees grow to the sky.”
“It will burn out in a spectacular crash. All of these latter-day speculators will have their hands burned to a crisp, and they will learn the proper lesson.”
At the heart of his critique was the fact that the wild fluctuations in the bitcoin’s price render it virtually unusable as an alternative to fiat currencies.
He further outlined that while many bitcoin proponents have been wowed by the recent opening of bitcoin future contracts on CBOE and other regulated exchanges, these developments do not necessarily signal a widespread acceptance of the bitcoin as a financial instrument.
Above all, the launch of bitcoin futures contracts does not guarantee less volatility in the crypto world.
Stockman’s criticism has come at a time when exchanges and fund providers seem to be on the run to list the first bitcoin exchange-traded funds (ETF).
He warned that contrary to popular belief, bitcoin derivatives do not necessarily give crypto coins any legitimacy. Instead, what they do is give Wall Street firms a shot at luring in ordinary investors who are already fascinated by bitcoin’s spectacular rise:
“Anytime Wall Street sees an opportunity to shear the sheep, and when they see the sheep stampeding to the slaughter, they line up with some new gimmick to take advantage of the circumstance.”
Stockman, however, refused to back the notion that world governments and regulatory bodies should rush in for a crackdown on bitcoin and other cryptocurrencies.