Forex in this article
Concerns about inflation and recession weigh on the crypto market
Financial expert expects the crypto bubble to burst
Hasler: Cryptocurrencies serve neither as a store of wealth nor as a currency
The crypto market is currently under pressure. Concerns about inflation and fears of recession in connection with the central banks’ decisive reaction – in the form of interest rate hikes – are not only straining the stock markets, but have also recently led to the prices of Bitcoin, Ether & Co. to collapse.
However, financial expert and analyst Peter Thilo Hasler does not see the supposed cryptocurrency bubble burst – at least not yet, as investors’ uncertainty is not yet great enough, as he reveals in an interview with Business Insider. In the long run, however, he sees no future for cryptocurrencies and explains that their value is actually negative.
Sooner or later, the bubble will burst
According to Hasler, the crypto bubble will probably burst sooner or later – but only when there is pure panic. But it will certainly happen, because in his opinion, cryptocurrencies need to be established as a storehouse of wealth or currency, which Hasler does not take for granted. The price of cryptocurrencies is far too volatile to act as an asset store, and Hasler believes prices could fall sharply again: “In the future, we will see even faster price declines, and in ten years no one will talk about cryptocurrencies anymore.” says the financial expert. “Just like today we shake our heads when we read what was paid for tulip bulbs in the 17th century.”
Cryptocurrencies have no value, only a price
Hasler also sees no value in cryptocurrencies: “Unlike other securities, cryptocurrencies generate no cash flows. I also do not see how they could generate any benefits in the future,” the analyst says. He compares cryptocurrencies with companies that, unlike digital coins, generate cash flows for which investors are willing to pay a certain amount, which is reflected in a certain value of a stock – as the company grows, its value increases and thus the value of shares.
The financial expert, on the other hand, points to a certain similarity for cryptocurrencies with stamp collections, which have no value but a price that depends on moods and new information that cannot be predicted. And Hasler even goes a step further in terms of digital coins: “If you look closely, they even have a negative value that is nurtured by the enormous energy consumption”.
Cryptos do not meet the criteria for a currency
The expert also does not believe that cryptocurrencies can win like currencies. Their anti-cyclical behavior, which gave them a reputation as a safe haven in crises for a while, has changed, and digital coins are now mostly falling in line with other asset classes – albeit sometimes much stronger. As a result, they lack an essential criterion for currencies: the function of storing value. “If cryptocurrencies are divided into thirds in a year, it will turn out that they are not behaving like normal currencies,” Hasler says. In addition, several technical barriers would make cryptocurrencies unsuitable for everyday use.
Exception: stack coins
However, Hasler makes an exception in its negative outlook for cryptocurrencies and it refers to stack coins like Tether, whose price is linked to a stable reserve value such as the US dollar – these have a right to exist. “They could, for example, help process payments from abroad that are processed through banks, faster and cheaper,” Hasler says.
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