The economist classifies the growth of Bitcoin and stocks as pure speculation. Concerning Bitcoin (BTC), he stated that its parabolic growth is “highly abnormal.”
David Rosenberg, current strategy leader at Rosenberg Research, questioned what is currently happening in the traditional financial markets and Bitcoin (BTC). The executive considers that the growth that has occurred in recent months is simply speculative.
Among the factors contributing to the bleak scenario, former Merrill Lynch chief economist cites the global health crisis, deteriorating economies, and the difficulty in providing a definitive vaccine against COVID-19. For that reason, there should theoretically be nothing to support the current momentum in the markets.
Rosenberg classified what happens in the economic field as a “human misery”, according to an article in Financial Post. Additionally, he mentioned that the Nasdaq index grew by 44% in 2020, while the S&P 500 grew by 16%.
Concerning stocks and cryptocurrencies, he said that “this is the most speculative and momentum-driven market that there has ever been. While Tesla was up by 743% in 2020, Bitcoin soared by 305%. More than 200 Special Purpose Acquisition Companies (SPAC) raised more than USD 80 billion. This is pure speculation.”
Within the world of finance, people know Rosenberg as a bearish or pessimistic analyst. He reiterated that the current situation is a “financial bubble of epic proportions that everyone seems to think that they will get out of in time.”
The economist said in an interview with the television channel CNBC that the shares were overvalued by up to 30%. Regarding the pioneering cryptocurrency, he gave his opinion on the parabolic move of Bitcoin in such a short period. He said that it is “highly abnormal” and that it could be the biggest bubble on the market today.
A Gold Investor with Bitcoin Ignorance
Taking into account his experience in the markets, he said that one asset is currently an exception: gold. Rosenberg thinks that the precious metal recently completed its best year in a decade. Furthermore, he sees it as a better hedging alternative than Bitcoin as it has only one-fifth the volatility of the cryptocurrency.
In the past, Rosenberg has admitted that he is ignorant of many things about Bitcoin, which he says that he does not fully understand. Furthermore, he highlighted that institutional investors who are into BTC also do not have a good understanding of the crypto asset that Satoshi Nakamoto designed.
The fund manager’s perspective contrasts with that of the US investor Bill Miller. The latter stated that having cash and not having Bitcoin is a guaranteed loss, which is why he has maintained investments in BTC since 2014. Rosenberg delivers those views at the peak of Bitcoin’s price boom with unprecedented prices. In just a few hours, the main cryptocurrency on the market broke four barriers, going from USD 38,000 per unit to more than USD 41,000 in recent days.
By Alexander Salazar