American billionaire investor and hedge fund manager Seth Klarman has questioned the utility of cryptocurrencies at a period the market is navigating sustained volatility.
Klarman suggested that the crypto sector will likely end up being worthless while questioning the concept of investing in multiple assets, Business Insider reported on June 23.
According to the billionaire, the crypto sector is likely meant for a few individuals even as proponents maintain that the market is headed for maturity and likely to culminate in mainstream adoption.
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“I can’t see the point of crypto. It has this feel to me of being like a catnip for techies. Why do people need 10 or 50 different cryptocurrencies? I don’t get it. I don’t think anybody needs to own it. It just seems to me that it could end up very much in tears,” said Klarman.
Questions over Bitcoin’s mining
In validating his objection to cryptocurrencies, the billionaire voiced the perennial concern about Bitcoin’s mining impact and power consumption. He noted that the mining aspect of cryptocurrencies is not viable.
Previously, Klarman had questioned Bitcoin’s volatility, comparing the asset to “trading sardine.”
Given that Bitcoin is increasingly viewed as an alternative payment solution by many within the crypto space, Klarman stressed that the U.S. dollar will likely remain the dominant currency.
Billionaire sceptical over Bitocin adoption
The Baupost hedge fund boss also expressed scepticism that the masses will likely adopt cryptocurrencies as a form of currency. Interestingly, his assertions come after El Salvador declared Bitcoin a legal tender but there is speculation the project has not kicked off as anticipated.
However, Klarman vouched for gold stating that it is the only valuable asset, especially in times of crisis. He maintained that gold should form part of any portfolio.
Notably, following Bitcoin’s significant rally in 2021, the asset was viewed as a possible hedge against inflation and eventually the presumptive store of value.
However, amid the ongoing high inflationary environment, Bitcoin has struggled losing its value by over 60% from the last all-time high in November 2021.
