Aswath Damodaran – professor of finance at Stern School of Business at New York University – has changed its tune on bitcoin (yet again), describing it this time as “the currency that nobody uses.”
Interestingly, he labeled it “millennial gold” in August last year, predicting it could gain global acceptance should it become less volatile.
Changing Position Once Again
Professor Damodaran, also known as “the Dean of Valuation,” recently expressed skepticism regarding bitcoin’s potential and current status. He views it as a currency that nobody uses and a “collectible that doesn’t behave like a collectible.”
He also opposed the theory that bitcoin could serve as a hedge against inflation, arguing that it is deeply correlated with equities:
“It’s gone up as stocks have gone up, it goes down when stocks go down. This is not the way a collectible is supposed to behave.”
It is worth noting that bitcoin has recently become more and more independent from traditional finance. As CryptoPotato reported last month, the leading digital asset’s correlation with the S&P 500 Index hit a two-year low of just 3%. The figure was around 50% at the start of 2023 and more than 35% at the beginning of the summer.
Damodaran has not been quite constant when sharing his stance on bitcoin. He criticized it in July 2021 (when the asset’s price was on a downtrend after previously surpassing the $60K milestone):
“A good currency, in my view, is one that [is] used to buy coffee, buy your house, buy a car, and on that count, bitcoin has failed, and not just failed, it’s failed miserably.”
The Indian also opined that gold, not BTC, is the true store of value, outlining the former’s resistance during financial catastrophes.
He made a U-turn one month later (when bitcoin was in the midst of a bull run), classifying the asset as the investment tool that younger individuals would choose. He claimed it has swapped gold and real estate as the most appropriate example for a store of value.
“If you are 35 years old, and you have lost faith, you are no longer going to buy gold. That was for your parents and your grandparents. You are going to buy bitcoin.”
One Other Example of a Change of Heart
When speaking of people who have not been persistent in their bitcoin vision, one should mention the popular TV personality – Jim Cramer. The host of CNBC’s financial show “Mad Money” has shifted from a crypto proponent to a fierce critic and back to a supporter several times over the years.
He described bitcoin as a “great alternative” to gold in 2020 and later insisted on receiving his salary in BTC instead of fiat currency. Nonetheless, he went to the other corner several months later, claiming that the cryptocurrency sector is full of “greater fools,” while his interaction with the asset class was simply “gambling.”
Most recently, Cramer explained that he is not against the industry but opposes “BOGUS crypto and outfits” that defraud investors.
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