Bitcoin, after surging to a price of nearly $70,000 last year, has plunged to around $40,000 as the red-hot cryptocurrency market cools.
The bitcoin price has recovered a bit from the lows of $35,000 per bitcoin last month, but has failed to convincingly recover amid fears of increased regulation and the imminent end of pandemic-era stimulus measures.
Now, veteran fund manager Jim Chanos has issued a dire warning about Bitcoin and cryptocurrency exchange Coinbase, calling it a "stock market bubble."
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The price of bitcoin has fallen considerably in recent months, raising fears about the future of cryptocurrencies. ... [+]
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โCoinbase is what we would call one of the bubble stocks,โ said Chanos, the founder of Kynikos Associates. CNBC in an interview, revealing that he is now shorting Coinbase, which means he is betting that Coinbase's share price will fall.
โWe believe that as competition in crypto increases, and this is not a call for crypto prices or bitcoin or anything like that, but we believe that as competition between exchanges increases, you will see a compression of fees, and as it is Coinbase probably won't be profitable this year with a market cap of $40bn."
Coinbase, which made its debut on the closely watched Nasdaq in April last year, has seen its value plummet by almost half, falling sharply along with the price of bitcoin.
"We're seeing the economy start to diverge," Chanos said, referring to Coinbase's stock link to bitcoin's price and throwing some cold water on expectations that the exchange will be able to diversify its gains with expansion into the non-core token. fungible (NFT). ) market that has experienced tremendous growth over the last year.
This week, John Todaro, an equity research analyst at Needham said Coinbase could see an additional $1.2 billion in revenue through the NFT market. Late last year, Coinbase CEO Brian Armstrong said the exchange's yet-to-launch NFT trading service had a waiting list of 1 million users, adding recently that the NFT market remained stable. strong despite trade volumes falling sharply.
โThere are a lot of companies that are in the new economy that have real growth, real cash flows with real profits, but there are a lot that just sell on stories. And we would say Coinbase is one that sells on a story,โ Chanos added. .
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The price of bitcoin has swung wildly over the past year, topping $60,000 per bitcoin alone twice. ... [+]
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However, many bitcoin and cryptocurrency investors remain optimistic despite the latest price drop.
"The $40,000 level remains a major psychological barrier and the fact that it rallied against the backdrop of mounting geopolitical and macroeconomic pressures actually shows the relative strength of bitcoin," said Mikkel Morch, CEO of the investment fund. ARK36, in comments sent via email.
"The volatility has not been particularly high considering a barrage of largely negative news in recent days with the increase in covid cases and the closure of the Chinese province of Shenzhen, which is sure to exacerbate the problems of the supply chain".
Morch predicts that "institutional investors have once again begun to look at bitcoin as a type of safe-haven, store-of-value asset," adding: "If we are seeing the beginning of a new world monetary order with a weaker dollar , bitcoin is likely to be one of the long-term beneficiaries of this change."
Earlier this month, legendary investor Jim Rogers warned that unprecedented sanctions against Russia's banks, wealthy people and the country's central bank spell "the end of the US dollar":predicting that countries will start "looking for a competitor" for the dollar and naming China, Russia, India, Iran, Brazil as interested in reducing their dependence on the dollar.
